Saunders & Co Articles

Saunders & Co Articles http://www.saunders.co.nz/articles/ Charitable Giving http://www.saunders.co.nz/charitable-giving/ New Zealanders are considered generous people with approximately 1.3 million kiwis regularly donating their time, money, goods and services to charities and other non-profit organisations. In an effort to further encourage and reward charitable giving, the 2007 Budget created a basis for a stronger culture of charitable generosity, which has been affirmed and incorporated into our Income Tax Act 2007. Changes in recent years increased thresholds for tax deductions and protocols have been implemented that make philanthropic endeavours easier and more convenient.&nbsp;
Deduction Incentives&nbsp;
Individuals - All individuals that donate to charities will be able to claim a 33.33% tax rebate on the amount of cash donations. Previously, deductions for charitable donations could not exceed $630 regardless of the amount.&nbsp;
For example, Jack donates $3000 to charities and non-profit organisations in a year. His taxable income for the year is $35,000. Previously, Jack would only be entitled to a deduction of $630. The recent change now means that Jack is entitled to a rebate claim of $1000 being 33.33% of the $3000 in donations.
Individuals are also able to donate direct from their pay to their chosen charitable organisation(s). In doing so, individuals receive immediate tax credits that decrease their PAYE. Payroll giving is only possible when it is offered by the employer, and is limited to employers who electronically file their monthly PAYE schedule. The only other condition is that the chosen charity/organisation must also be one that is approved by the Inland Revenue Department.&nbsp;
Companies - All companies, even those with five shareholders or less, are eligible for tax deductions when they donate to charitable organisations (as described in the Income Tax Act 2007). Previously, companies could only claim a rebate for a sum up to 5% of their revenue. The 5% limit on deductions has now been removed and companies are entitled to deductions limited only by the company's net income.&nbsp;
For example, in the 2008/2009 year ABC Ltd made charitable donations amounting to $10,000. Its income before taking into account the donations was $100,000. Previously, the deduction entitlement for the company would have been $5000. As of 2009, the company is entitled to a $10,000 tax deduction, which also reduces its taxable income to $90,000.&nbsp;
Maori Authorities - Incentives for Maori Authorities are much the same as that of companies. These authorities will be able to claim deductions for cash donations made to charitable organisations limited only by the amount of their net income.&nbsp;
Conclusion Charitable and non-profit organisations play a crucial role in our communities and it is hoped that the recent changes will encourage and reinforce our culture of giving by providing tax incentives for individuals and organisations alike. It also puts New Zealand on par with other OECD countries such as Australia and the United Kingdom in terms of tax relief provisions for charitable donations. The Government estimates that donations will increase by $300 million a year from 2009, which will make up for the $16.2 million of lost revenue due to the law change. Deductions currently apply only to financial donations and do not extend to donations of goods or services.
&nbsp;
&nbsp; Tue, 01 Feb 2011 16:55:00 -0600 http://www.saunders.co.nz/charitable-giving/ When a Disaster Strikes - Know your Rights http://www.saunders.co.nz/when-a-disaster-strikes-know-your-rights/ New Zealand is internationally renowned for it's breathtaking and diverse landscape, however less publicised, until recently, is the fact that we are situated between two major fault lines. Consequently seismic activity is also an undeniable feature of life in our remarkable land. The recent Canterbury earthquakes are a timely reminder of this fact and in light of this here are some key points to keep in mind if you are a tenant, landlord or home-owner.&nbsp;
Residential Tenancies
In the event of a natural disaster, the Residential Tenancies Act 1986 allows both the landlord and tenant to terminate the tenancy. Where a home has been damaged to the extent that it is uninhabitable, no rent shall be payable until the home is reinstated so that the tenant can re-occupy. Alternatively, the landlord or tenant may wish to terminate the tenancy. If a tenant wishes to terminate the tenancy, the landlord must be given at least two days notice. Where a landlord wishes to terminate the tenancy, the tenant must be given at least seven days notice. In situations where the home is partially damaged, the rent may be proportionately reduced or either party may apply to the Tenancy Tribunal for an order terminating the tenancy.&nbsp;
Commercial Leases
The Auckland District Law Society (ADLS) Lease, the most commonly used commercial lease, allows for the termination of the lease in the event of a natural disaster. In situations where the damages render a property uninhabitable, the lease is terminated instantly. Where the damages are partial, rent shall be abated and the landlord is required to use insurance monies to repair damages as quickly as possible. If the necessary building consents are unobtainable and insurance payments are inadequate to facilitate a timely restoration, the lease is terminated. If premises are uninhabitable and require demolition or reconstruction, the landlord may cancel the lease giving the tenant 20 working days notice.&nbsp;
In the absence of a lease, the Property Law Act 2007 provides similar remedies in the event of specified natural disasters. Landlords can recover rental losses through their insurance providers if they are covered for loss of rent and outgoings.&nbsp;
Residential Property
In the event of an earthquake or natural disaster, homes, personal possessions and land are automatically covered by the Earthquake Commission (EQC) - provided home-owners have pre-existing private and fire insurance policies. The EQC provides cover for:&nbsp;
<ul class="unIndentedList">
<li>damages of up to $100,000 caused to homes,</li>
<li>personal possessions of up to $20,000, and</li>
<li>for loss of land value based on a professional valuation.&nbsp;</li>
</ul>
Any value over and above these amounts may be covered under existing private insurance policies. Claims to the EQC need to be made within 30 days of the damage occurring but can be extended to three months in some circumstances. Tue, 01 Feb 2011 16:55:00 -0600 http://www.saunders.co.nz/when-a-disaster-strikes-know-your-rights/ Changes to the Employment Relations Act http://www.saunders.co.nz/changes-to-the-employment-relations-act/ Recent changes to the Employment Relations Act ('ERA') introduce legislative amendments aimed at promoting a more flexible relationship between employees and employers. The changes are to take effect on 1 April 2011.&nbsp;
Adjustments to Personal Grievance Regime
Changes to the personal grievance regime are aimed at reducing compliance costs, improving resolution processes and reducing delays. The changes also create an interim step for dispute resolution before the authorities get involved. For example, one such change is that the Mediation Service is now able to make recommendations, which both parties have seven days to accept or decline, and if accepted the recommendations become binding.&nbsp;
The amendments also ensure that the Employment Relations Authority ('the Authority') acts more formally and consistently without jeopardising the investigative nature of its inquiries. The changes also allow the Authority to dismiss claims that are deemed to have no merit, and allows parties to cross examine witnesses during Authority investigations.&nbsp;
90-Day Trial Period
Another major change is the extension of the 90-day trial period to all employers, which was previously limited to employers with 19 staff or less. Statistics showed that 40% of employers said they would not have employed new staff if it was not for the 90-day trial period, and 75% of all job-seekers who worked under the trial period maintained their employment. As a result, the trial period allowed more job-seekers to enter the workforce as more employers were willing to hire new staff. The purpose of extending the 90 day trial is therefore to extend such benefits to a wider range of employers and employees.&nbsp;
Union Access
Unions will be required to gain the consent of the employer before accessing a workplace. Currently unions are able to enter workplaces without consent and without giving notice. The change is aimed at standardising current practices and recognises an employer's right to authorise who enters their premises. It will also allow employers to identify when union representatives are on site and to take measures to ensure business operations are not unduly disrupted. Consent must not, however, be unreasonably withheld and reasons for refusal must be provided within two working days. Failure to provide such reasons or withholding consent unreasonably may result in a penalty for breaching the ERA.&nbsp;
Communications during Collective Bargaining
Although direct communication with employees was never prohibited, there was a great deal of confusion surrounding the matter. The changes clarify that employers can directly communicate with employees during collective bargaining and can include details of any settlement offer. Any communication must be consistent with the employer's overriding duty of good faith under the ERA.&nbsp;
Employment Agreements
From 1 July 2011, employers are also required to keep original signed copies of employment agreements of every employee. Where an agreement has not been signed, a draft copy must be kept on record. Failure to comply with these requirements can result in a fine. Tue, 01 Feb 2011 16:55:00 -0600 http://www.saunders.co.nz/changes-to-the-employment-relations-act/ Gift Duty to be Abolished http://www.saunders.co.nz/gift-duty-to-be-abolished/ Gifting your assets is set to become easier with gift duty due to be abolished on 1 of October 2011. At present, gift duty is imposed on all gifts with a total value exceeding $27,000 in any 12 month period. The abolishment of gift duty will allow individuals to make gifts of any value in any one year without attracting gift duty and therefore not requiring the use of gifting programmes.
Background
Gift duty was established in 1885 with the purpose of protecting the estate duty base (through discouraging individuals from gifting away their assets prior to death) and to raise revenue. Estate duty was abolished in 1992, however, gift duty was preserved to guard against people taking advantage of social assistance regimes and provide protection to creditors.
Reasons for Abolishment
The abolishment has received broad approval from a range of government agencies including the Inland Revenue Department (IRD), New Zealand Treasury and the Ministry of Social Development. The key motivations for the abolishment stem from a review by the IRD highlighting that gift duty generated exceedingly high compliance costs of $70 million compared to the meagre revenue generated ($1.6 million in the 2009/2010 year). It was also noted that gift duty was easily avoided through the use of gifting programmes and therefore no longer remained an effective tool. It also follows a large number of requests for thresholds to be raised and for the modernisation of administration processes.&nbsp;
Concerns and Cures
There are concerns that the abolishment of gift duty will see a significant rise in the creation of trusts and an increase in the number of transfers of assets into trusts. Concerns over 'social assistance targeting' relate to individuals deliberately impoverishing themselves to avoid assets being included in their assessment for social assistance, relationship property or to escape creditor liability. However the IRD, in its agency disclosure statement, deemed these risks as low and have suggested policy changes to counter any abuse of trusts - such as the Ministry of Social Development taking into account any asset transfers within the past five years of an applicant applying for social assistance. The family courts are also more closely scrutinising trusts with regard to relationship property matters, and claimants access to those assets.&nbsp;
Concerns that the repeal will affect creditor protection in the event of a debtor going bankrupt has been deemed insignificant as other means of protection are readily available through the Insolvency Act, Companies Act and Property Law Act.&nbsp;
The establishment of a Trust Register, and requiring trustees to file annual financial statements, have also been recommended to the Law Commission for review as a means of monitoring and regulating trusts in New Zealand.&nbsp;
Conclusion
Despite concerns regarding the abuse of trusts, the IRD deems the risks entailed with the abolishment of gift duty as arguably insignificant and heavily outweighed by the monetary benefits generated. It predicts that with the co-operation from affected agencies and implementation of the recommendations from the recent review of NZ Trust Law, any loop-holes will quickly be sealed.
&nbsp;For more information on this subject, please visit the <a href="http://www.taxpolicy.ird.govt.nz/publications/2010-ris-gift-duty/gift-duty-repeal ">IRD website</a>.
For further prespective, please refer to law clerk Rachale Mortiaux's article <a href="http://www.saunders.co.nz/gift-duty-aboltiion-and-the-effect-on-trusts-the-good-the-bad-and-the-likely-implications/">here</a>. Tue, 01 Feb 2011 16:55:00 -0600 http://www.saunders.co.nz/gift-duty-to-be-abolished/ Changes to the Holidays Act http://www.saunders.co.nz/changes-to-the-holidays-act/ With immediate effect, if a business has an annual 'shutdown' period and a public holiday (such as Christmas) falls on a day that an employee would normally work, the employee is entitled to be paid for the public holiday even though it occurs when the business is closed.&nbsp;
As of April 2011:&nbsp;
<ul class="unIndentedList">
<li>employees will be able to exchange up to one week of annual holiday for cash provided their employer agrees to the request,</li>
<li>employees will be able to transfer the observance of a public holiday to another predetermined working day with the employer's consent,</li>
<li>for employees that have irregular hours and/or pay, the payment for sick leave, bereavement leave, public holidays and alternative holidays will be based on the average gross earnings for the previous 52 weeks or whatever lesser period the employee has been employed,</li>
<li>employers will be able to request proof of sickness within the first three days of an employee being away on sick leave. Employers are to cover reasonable costs, such as doctor's fees, in obtaining such proof.&nbsp;</li>
</ul>
A guide to the changes will be available at the <a href="http://www.dol.govt.nz">Department of Labour </a>before April 2011. Tue, 01 Feb 2011 16:55:00 -0600 http://www.saunders.co.nz/changes-to-the-holidays-act/ Email Disclaimers - How Effective are They? http://www.saunders.co.nz/email-disclaimers-how-effective-are-they/ <img class="left" src="http://www.saunders.co.nz/assets/Uploads/NewFolder/_resampled/ResizedImage400400-EMAIL1.JPG" width="400" height="400" alt="" title="" />Email disclaimers have become the norm for many businesses and organisations. But are they legally binding?
The Electronic Transactions Act 2002, Section 8, validates all electronically transmitted data/information and gives it the same standing as a written document. Arguably therefore there is no reason, in theory, why a properly constructed email disclaimer could not be legally enforceable.&nbsp;
To increase the likelihood of legal enforceability, the disclaimer must be worded appropriately and must be practical in the sense that it is 'sufficiently drawn to the attention of the recipient'. Things to consider are the text size, font and placement/format of the disclaimer in the email. Placing a disclaimer at the top of an email rather than at the bottom is perhaps a better alternative.&nbsp;
Disclaimers are unlikely to have legal force unless they contain confidentiality obligations. The inclusion of confidentiality and legally privileged clauses is therefore highly recommended as it gives the disclaimer more weight by placing the reader 'on-notice'. In situations where sensitive information is sent to the wrong recipient, a court order can be sought either demanding the recipient delete the email and/or prohibiting publication. Tue, 01 Feb 2011 16:55:00 -0600 http://www.saunders.co.nz/email-disclaimers-how-effective-are-they/ 90 Day Trial Periods - Employers Beware http://www.saunders.co.nz/90-day-trial-periods-employers-beware/ The Government's proposed changes to the Employment Relations Act 2000 ('ERA') include extending the 90 day trial period to all employers, rather than just those with fewer than 20 employees. The main benefit of a trial period is that it allows an employer to dismiss an employee within the 90 day trial period without fear of a claim from the employee of unjustified dismissal.&nbsp;
The Department of Labour has recently conducted an evaluation of trial periods and found that approximately 40% of employers stated that they would not have hired their last employee without the trial period and 74% of people hired on a trial period have retained their positions. It therefore appears to have been a win-win for both employees and employers.&nbsp;
The first decision on the interpretation of provisions, Smith v Stokes Valley Pharmacy (2009) Limited, demonstrates that an employer must comply strictly with the provisions of the legislation.&nbsp;
In this case Heather Smith was working in the Stokes Valley Pharmacy when it was sold. Heather was offered a job with the new employer and on 1 October 2009 commenced work for them. On 2 October 2009, she signed a new employment agreement that contained a 90 day trial period. The new employer quickly became dissatisfied with Heather's performance, and in reliance on the trial period provisions, terminated her employment in December 2009.&nbsp;
Heather commenced proceedings against her employer and, despite the existence of the trial period, the Employment Court found that Heather could make a claim for unjustified dismissal.&nbsp;
Under s67A of the ERA, trial periods can only apply to a person who has not previously been employed by the employer. When Heather signed her employment agreement on 2 October she had already commenced work, even if it was only for a day, and therefore she was no longer a 'new employee'. The employer argued that Heather had by her conduct accepted the terms and conditions of the draft employment agreement as it was provided to her on 29 September 2009. The Court rejected this argument and held that the Agreement required execution by signature and until it was signed the Agreement remained a draft that could potentially be amended. The result was that the trial period was void and Heather could claim unjustified dismissal, the very action the employer thought they were protecting themselves from.&nbsp;
This decision also discussed the requirement of good faith in relation to trial periods. It was found that an employer is not obliged to notify an employee, who is employed under a trial period, of the employer's intention to dismiss them. Once dismissed, if an employee requests an explanation for the dismissal, good faith requires that they must be given one.&nbsp;
It was also found that if an employer seeks to rely on a trial period, the employment agreement must be terminated lawfully and in accordance with s67B (1) of the ERA, which requires notice to be given. While there is nothing in the ERA determining the length or form of this notice, in this case Heather's contract required 4 weeks notice. Therefore, the court found that the two weeks notice period that was given was deficient and subsequently the agreement was not lawfully terminated.
This decision highlights that employers who wish to rely on a trial period must comply strictly with the provisions of the ERA. Mon, 01 Nov 2010 16:55:00 -0500 http://www.saunders.co.nz/90-day-trial-periods-employers-beware/ Directors Right to Rely on Specialist Advice http://www.saunders.co.nz/directors-right-to-rely-on-specialist-advice/ The recent 'Feltex Five' decision, Ministry of Economic Development v Feeney and Ors, demonstrated that directors may avoid being held personally liable in certain circumstances if they have relied on expert advice.
The decision involved the prosecution of five Feltex directors ('Directors') for failing to disclose breaches of an ANZ loan agreement and for classifying this ANZ liability as a current liability in their financial reports. While the Directors did not deny that their reports breached the Financial Reporting Act 1993 ('FRA'), they argued that they had a defence under s40 FRA, in that they took all reasonable steps to ensure that the requirements under the FRA had been met. The Directors argued that they relied on expert advice which led them to believe that their reports were compliant.&nbsp;
At the time the financial reports were prepared, the company was transitioning to new financial reporting standards and commissioned a team of accountants to review these standards and the company's financial reports. However, it was reported that the accountants incorrectly advised the company of the requirements under the new standards and their advice led to the breach and subsequently the prosecution of the Directors. The issue was whether the Directors could rely on this expert advice or whether they should have taken further steps to meet the requirements under s40 FRA.&nbsp;
The Court held it was necessary to determine whether the Directors had taken all reasonable steps in light of the protections under the Companies Act 1993 (the 'Act'). Under s138 of the Act, directors are able to rely on information and advice from a professional adviser or expert in relation to matters which the director believes on reasonable grounds to be within the person's professional or expert competence.&nbsp;
This defence applies where it is evident that directors:&nbsp;
<ul class="unIndentedList">
<li>acted in good faith,</li>
<li>made proper inquiries where the need for inquiry is indicated by the circumstances, and</li>
<li>had no knowledge that such reliance is unwarranted.&nbsp;</li>
</ul>
In this case it was found that a reasonable director, having read the accountants' report and having attended their meeting, would have been left with no doubt that the financial statements complied with the new standards. Therefore the Directors had no knowledge that reliance was unwarranted and were entitled to believe that the work undertaken by such a highly reputable firm was within their expertise. Furthermore, they were aware that the transition to the new standards was very complex and had put in place a comprehensive strategy to manage it.&nbsp;
Therefore it was held that the Directors took all reasonable and proper steps to ensure the requirements of the FRA were complied with and there was no evidence of an intention to mislead. Each of the Directors was found not guilty. Mon, 01 Nov 2010 16:55:00 -0500 http://www.saunders.co.nz/directors-right-to-rely-on-specialist-advice/ Alcohol Law Reform Package http://www.saunders.co.nz/alcohol-law-reform-package/ There has been a reported increase in the consumption of alcohol since the liberalisation of the liquor laws in 1989, which made alcohol more affordable and more widely available. On 23 August 2010 the Minister of Justice, Hon. Simon Power, announced a new Alcohol Law Reform package. This new package is based on the Law Commission's report "Alcohol in our Lives: Curbing the Harm" (NZLC R114, Wellington 2010) a follow up on the initial report "Alcohol in our lives" (NZLC IP15, Wellington, 2009), and incorporates 126 of their recommendations.&nbsp;
The Law Commission's reports revealed that 54% of people under 25 and 25% of adults consume large quantities (6 plus standard drinks for males and 4 plus standard drinks for females) of alcohol when they drink, and that the number of liquor licences has doubled in the past two decades. However, it identified the main concerns for society are those aged 14-19 who are drinking at an earlier age and consuming larger quantities of alcohol than previous surveys have shown for this age group.
The problem with this heavy drinking culture is the risk that it poses and harm that it causes both to the individual and to society. Alcohol contributes to 1,000 deaths per year and is a factor in 31% of all police-recorded offences, 34% of family violence incidents, and 49.5% of all homicides. The aim of the reform package is to change this drinking culture and reduce the harm it causes by restricting both access to alcohol and the advertisement of alcohol.&nbsp;
The reforms will provide the following:&nbsp;
<ul class="unIndentedList">
<li>A split purchase age, 18 years for on-licenses and 20 years for off-licenses.</li>
<li>Restricting RTDs to 5 per cent alcohol content and limiting RTDs to containers holding no more than 1.5 standard drinks.</li>
<li>That it is an offence to supply alcohol to a person under the age of 18 years without their parent's or guardian's consent, and there is also a requirement that alcohol is supplied responsibly.</li>
<li>That the Minister of Justice may ban alcohol products that are particularly appealing to minors or dangerous to health.</li>
<li>It is an offence to advertise alcohol in a way that appeals to minors.</li>
<li>Communities are to have a greater say on the concentration, location, and opening hours of alcohol outlets through the use of local alcohol policies.</li>
<li>For a restriction of maximum opening hours for off-licenses to 7am - 11pm and for on-licenses, club licenses and special licenses to 8am - 4am.</li>
<li>Clarity to the law that dairies and convenience stores are not "off-licenses" (and therefore cannot sell alcohol), together with increasing penalties for a range of licence breaches.</li>
<li>An extension of liquor bans to include places that the public has legitimate access to, for example car parks and school grounds.</li>
<li>Strengthening the offence of promoting excessive consumption of alcohol by having it apply to any business selling or promoting alcohol and providing examples of unacceptable promotions such as giving away free alcohol.</li>
<li>Improved public education and treatment services.</li>
</ul>
It is anticipated that these reforms will provide a balance between restricting the use of alcohol and not inconveniencing those who drink responsibly. However, as has been reported in the media, by trying to satisfy everyone the changes may not go far enough to make a significant difference. Mon, 01 Nov 2010 16:55:00 -0500 http://www.saunders.co.nz/alcohol-law-reform-package/ DNA Collection http://www.saunders.co.nz/dna-collection/ From 6 September 2010 the Criminal Investigation (Bodily Samples) Amendment Act 2009 extended police powers, giving them the authority to take DNA samples from individuals who are arrested. Previously samples could only be taken with the individual's consent, or where there was a court order, or police-issued compulsion notice, or the person had already been convicted of an offence.&nbsp;
These new powers are being implemented in two stages:
1)&nbsp;&nbsp;&nbsp; From 6 September 2010 the police can take DNA samples from individuals who have committed indictable offences, such as those punishable by more than 7 years imprisonment.
2)&nbsp;&nbsp;&nbsp; At a date yet to be set, these powers will then be extended to include individuals accused of any imprisonable offence.&nbsp;
Justice Minister Hon. Simon Power believes the key benefit will be the ability to solve "cold cases" and identify some of the 8,000 unidentified DNA samples. It is predicted that stage 1 will result in 4,000 more samples a year and 2,800 links to the crime scene database.&nbsp;
On the flipside, safeguards have been put in place. The police have developed guidelines, individuals will be penalised for misusing DNA, and if someone is not convicted their DNA will be destroyed rather than stored.
&nbsp; Mon, 01 Nov 2010 16:55:00 -0500 http://www.saunders.co.nz/dna-collection/ Government Legislative Response to Earthquake http://www.saunders.co.nz/government-legislative-response-to-earthquake/ Parliament moved quickly to pass the Canterbury Earthquake Response and Recovery Act 2010 ('the Act'), which received Royal Assent on 14 September 2010 just 10 days after the earthquake struck. The Act will remain in force until 1 April 2012.&nbsp;
The Act grants the Government wide powers to make Orders in Council ('Orders') to relax or suspend provisions in any enactment that:&nbsp;
<ul class="unIndentedList">
<li>may divert resources away from the effort to respond to the earthquake, or</li>
<li>may not be reasonably capable of being complied with as a result of the earthquake.&nbsp;</li>
</ul>
The Orders may be used to temporarily override almost any law and are likely to be used to authorise such matters as the destruction of buildings, regulate drainage and sanitation, and modify or extend town planning provisions. Unlike previous earthquake legislation, the Act does not specifically state what financial assistance the Government will provide and it does not create a right to compensation. Instead it establishes a Recovery Commission that will provide advice to the relevant Minister on Orders in Council and the prioritisation of resources and how funds should be allocated. Mon, 01 Nov 2010 16:55:00 -0500 http://www.saunders.co.nz/government-legislative-response-to-earthquake/ Paths, Terrains, and Automobiles - What is Reasonable Access to Land? http://www.saunders.co.nz/paths-terrains-and-automobiles-what-is-reasonable-access-to-land/ The Court of Appeal recently considered this issue in the case of Murray and Tuohy v BC Group (2003) Limited and Ors [2010] NZCA 163. The appellants and their neighbours owned adjoining properties in the Wellington hillside suburb of Ngaio. The properties were created by a subdivision in 1963. The appellants purchased their property in 1989 with the only access to the property via a steep council owned pedestrian footpath.
Twenty years later and suffering health problems, the appellants sought an order under Section 129B of the Property Law Act 1952 requiring their immediate neighbours to provide access to their property through a right of way easement, on the basis that their land was landlocked. Section 129B is the remedial provision available to a landowner whose land is landlocked.
The Court of Appeal said that the approach in Section 129B cases is well settled and involves three stages (briefly) stated as:
<ul class="unIndentedList">
<li>deciding whether the claimant's land is landlocked within the meaning of the section,</li>
<li>if yes, determining how the discretion given to the Court by the section should be exercised, and</li>
<li>if the Court decides to grant access to the landlocked land, to determine the terms of access.</li>
</ul>
The High Court, from which the appeal came, held in February 2009 that the appellant's property was not landlocked for the purposes of Section 129B (and accordingly there was no need to consider the second and third stages).
Under section 129B(1)(a) a "piece of land is landlocked if there is no reasonable access to it". It was the appellant's case that taking into account modern day community expectations and standards, a residential property without vehicular access does not enjoy reasonable access and is therefore landlocked.
In the Court of Appeal, Justice Gendall, who delivered the reasons of the Court, stated "we cannot accept that it is necessarily the case that under modern day community standards vehicular access on to the site of a residential property is necessary for it to enjoy reasonable access".
Further into the judgement Justice Gendall stated "obviously, if people cannot get onto their property it has no reasonable access. If they can access it from a public roadway or walkway through a suitable pedestrian route then such access may be reasonable, depending on the circumstances". In this case there was evidence from the respondents that this was typical of access to properties in Wellington's hilly suburbs.
The Court of Appeal agreed with the High Court's conclusion that, as a matter of fact having regard to contemporary standards, the present access was reasonable and that vehicular access was primarily a matter of convenience for the appellants. Accordingly the appeal was dismissed
&nbsp; Sun, 01 Aug 2010 16:55:00 -0500 http://www.saunders.co.nz/paths-terrains-and-automobiles-what-is-reasonable-access-to-land/ Directors Duties http://www.saunders.co.nz/directors-duties/ While companies provide limited liability and are considered a separate legal entity, directors can become personally liable if they breach their duties. These duties have become increasingly important in light of the recent financial downturn. When there is financial uncertainty, directors are more likely to make decisions for which they could be held liable. This in turn gives rise to increased media attention.
Recently there have been numerous reports of the Securities Commission taking proceedings against directors of finance companies for misleading investors. Under the Securities Act these directors face fines of up to $500,000 in civil proceedings, and up to five years imprisonment or fines of up to $300,000 in criminal proceedings. Therefore directors need to be aware of their obligations to the company.
Duties under the Companies Act 1993
The key duties, found in Part 8 of the Companies Act 1993 sections 131-137, include the following:&nbsp;
<ul class="unIndentedList">
<li>The duty to act in good faith and in the best interests of the company.</li>
<li>The duty to use their powers for the purpose for which they were conferred and not for any ulterior motive.</li>
<li>The duty to act in accordance with the obligations under the Companies Act 1993 and the company's constitution.</li>
<li>That a director must not agree to cause, or allow the company's business to be conducted in a manner that is likely to create a substantial risk of serious loss. To determine this the court will look at what an 'ordinary prudent director' would have done in the circumstances.</li>
<li>The duty not to take on any obligations unless it is believed on reasonable grounds that the company will be able to perform those obligations when required to do so, and</li>
<li>The duty to use the reasonable care, diligence and skill that a reasonable director would exercise in the circumstances.</li>
</ul>
Recent Director Liability Cases
Directors must actively ensure that they are meeting their obligations. The recent case FXHT Fund Managers Ltd v Oberholster held that directors who are not actively engaged in the company or 'sleeping directors' can be liable. In this case the inactive director was held liable for a breach of his duty of care even though it was his co-director who defrauded investors. Initially he was not aware of his co-director's dealings, but as soon as he became aware he reported the matter to the authorities; however he was still held liable.
Similarly in Lewis v Mason and Meltzor the directors relied on a manager and did not exercise sufficient control over the company's financial position or the day to day running of the company. It was found that reliance on a manager does not excuse a director from liability and the directors were ordered to contribute to the Company's debts.
Summary
The above cases show the need for directors to take positive steps to discharge their obligations under the Companies Act, and be proactive directors who are aware of and adhere to the duties imposed on them.
&nbsp; Sun, 01 Aug 2010 16:55:00 -0500 http://www.saunders.co.nz/directors-duties/ Police Safety Orders http://www.saunders.co.nz/police-safety-orders/ As from 1 July 2010, amendments to the Domestic Violence Act 1995 now enable the Police to issue on-the-spot 'Police Safety Orders' ('PSO').
Under this new regime, a qualified constable may issue a PSO in a situation where the parties are in a domestic relationship, and where the Police have reasonable grounds to believe that family violence has occurred or may occur but there is insufficient evidence to make an arrest.
In issuing a PSO the constable must consider whether domestic violence is or has been taking place, the hardship the PSO may cause to any party and any other matters the constable considers relevant.
The PSO may last for up to 5 days and provides the victim with immediate protection. It is hoped that the order will provide a way of filling the gap between an incident occurring and the issuing of a Temporary Protection Order.
An important element of the PSO is that it does not require the consent of the victim. As a result victims who are too scared or intimidated to act will nevertheless be afforded the necessary interim protection to enable them to take further steps to secure their ongoing safety.
The person bound by the PSO order must:&nbsp;
<ul class="unIndentedList">
<li>vacate the premises for up to 5 days,</li>
<li>surrender all firearms and their firearm licence for the period of the PSO,</li>
<li>not threaten, assault, intimidate or harass the protected person or encourage anyone else to do so, and</li>
<li>not contact the protected person.</li>
</ul>
The PSO also protects any children that live with the protected person and suspends any parenting orders or access or care agreements that benefit the person bound by the order.
The conditions under a PSO are similar to those under a court ordered Protection Order. However, unlike a Protection Order, the protected person under a PSO cannot consent to residing with the person bound by the PSO.
In the event that the PSO is breached, the bound person can be taken into custody and must appear before the Court. The Court may then:&nbsp;
<ul class="unIndentedList">
<li>direct the Police to issue a further PSO, </li>
<li>release the bound person without further order, or</li>
<li>issue a Temporary Protection Order if the protected person does not object.</li>
</ul>
Concerns have been raised that in some circumstances the consequences for the bound person following the making of the order may be harsh. These orders, however, have the potential to assist victims to escape domestic violence, especially as the victim's consent is not needed for an order to be made.&nbsp; Sun, 01 Aug 2010 16:55:00 -0500 http://www.saunders.co.nz/police-safety-orders/ Animal Welfare Bill http://www.saunders.co.nz/animal-welfare-bill/ Incidents of animal cruelty are increasingly reported by the media yet despite the abundance of offending there have been very few prosecutions in relation to animal cruelty, and only a 3% imprisonment rate.&nbsp;
The Animal Welfare Amendment Bill has been introduced to send a clear message to the public that offending of this nature will not be tolerated. It is believed that in the absence of government intervention, incidents are only likely to increase. There is also a growing body of evidence linking animal cruelty to aggression towards humans. The Hon. Simon Bridges, who advanced this Bill, believes that if we treat animal cruelty seriously we may also help prevent further serious offending.&nbsp;
Outlined below are some of the changes proposed by the Bill.&nbsp;
An increase in the maximum sentences for various ill-treatment offences. The penalty for wilful ill-treatment will increase from three years to five years imprisonment, together with a maximum fine of $100,000 for individuals and $500,000 for a body corporate.&nbsp;
A new offence of reckless ill-treatment will be introduced to fill the gap between the offence of wilful ill-treatment and simple ill-treatment. This provision will apply when the offender knew or appreciated that serious harm could occur and unreasonably still took the risk. The penalty will be a maximum of three years imprisonment, or a fine not exceeding $75,000 for an individual and $350,000 for a body corporate. Federated Farmers have expressed concern that this new offence may place farmers at risk of prosecution in the course of their normal farming duties and that it does not take into account the complexities and financial realties of animal ownership for production. Parliament's view is that the new section is essential to ensure prosecution and harsher penalties for those serious offences that do not meet the threshold for wilful ill-treatment.&nbsp;
It will also be more difficult to remove an order that disqualifies an individual from owning an animal for a period of time. Individuals will not be able to apply to have an order removed within two years of it being made, or for the period specified in the order. The penalty for contravening a disqualification order will increase to a maximum of three years imprisonment or a fine not exceeding $75,000 for an individual or $350,000 for a body corporate.&nbsp;
The rules around forfeiture of animals will be broadened to enable all animals owned by the offender to be removed, and not just the animal that is the subject of the offence. Unfairness around forfeiture is to be avoided by ensuring that an owner does not have to forfeit their animal if the offending behaviour was committed by someone else.&nbsp;
Overall it is believed that these new provisions will strengthen the Act and enable serious offending against animals to be dealt with more effectively. Sun, 01 Aug 2010 16:55:00 -0500 http://www.saunders.co.nz/animal-welfare-bill/ The Importance of a Current Will http://www.saunders.co.nz/the-importance-of-a-current-will/ The recent High Court decision in re Trotter is a timely reminder of the importance of having a current will, particularly for parties who have recently separated.
Murray and Christine Trotter separated in May 2001 without a separation agreement or the making of a separation order. In October of that year a matrimonial property agreement was concluded that provided for the transfer of the matrimonial home into the sole ownership of Murray and the payment to Christine of half the equity in the home.
Murray occupied the home until his death in 2009 when he died intestate (i.e. having not made a will). Christine applied for Letters of Administration on the grounds that she had a sole beneficial interest in the estate.
The court noted the following:&nbsp;
<ul class="unIndentedList">
<li>Regardless of the fact that the parties had executed a matrimonial property agreement, Christine had a beneficial interest in the estate as a surviving wife.</li>
<li>Murray and Christine separated by mutual agreement and did not obtain a separation order from the Family Court and therefore Christine was not prevented from obtaining Letters of Administration.</li>
<li>There were no other potential claimants.</li>
</ul>
The court found that no cause had been shown why Christine should not be granted Letters of Administration. Christine had the sole beneficial interest in the estate and therefore took priority under the High Court rules. Sun, 01 Aug 2010 16:55:00 -0500 http://www.saunders.co.nz/the-importance-of-a-current-will/ Emissions Trading Scheme in the Agricultural Sector http://www.saunders.co.nz/emissions-trading-scheme-in-the-agricultural-sector/ What is the Emissions Trading Scheme?
The Emissions Trading Scheme ('ETS') is a scheme designed to encourage the reduction in greenhouse gas emissions such as carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulphur hexafluoride. It is also designed to promote investment in renewable energy, efficient and clean technology, and the planting of trees that act as "carbon sinks".
It is a scheme based on "units". Simply put, units are bought and sold between participating organisations and individuals. If a participant sells a product that emits greenhouse gases, for example a natural gas company whose consumers emit greenhouse gases when gas is used, it is required to purchase units from another organisation that has earned units (such as a forestry company that grows trees and is able to sell those units). Units can be sold either to other participants or on the Global Emissions Markets.
When does the Agricultural Sector enter into the Scheme?
Farmers will be indirectly affected by the ETS from 1 July 2010 due to increased costs of compliance and preparatory/preventative measures prior to entry into the scheme. Farmers will not be directly affected until at least 2015, as meat and dairy processers such as Fonterra will be the initial participants in the ETS, and accordingly will have compliance obligations to meet initially.
The agricultural sector enters the ETS in full on 1 January 2015 as it pertains to the farming sector's release of greenhouse gases such as methane and nitrous oxide. The agriculture sector will have already entered into the scheme from 2012 in relation to carbon dioxide emissions produced by energy and fossil fuel use.
What Costs will there be to Farmers?
To use the dairy sector as an example, Fonterra predicts that by 2015 the total average cost per shareholder will increase by about $10,000. Fonterra's Guide to Climate Change reports that:&nbsp;
<ul class="unIndentedList">
<li>for the average Fonterra shareholder operating costs will increase by about $2,500 every year from 2013,&nbsp;</li>
<li>agricultural emissions produced by cattle (methane and nitrous oxide) will cost the average farmer an additional $2,500 a year from 2015,&nbsp;</li>
<li>Fonterra itself will face increased costs due to being a participant in this scheme. Costs are estimated to be an additional $25 million dollars per year from 1 July 2010 and $50 million dollars per year from 2013 (these costs are not expected to be exponential),&nbsp;</li>
<li>from 2015, the average cost increase per shareholder will be in the vicinity of $10,000, or an extra cost of 7c per kilogram of milk solids.</li>
</ul>
What can Farmers do?
The scheme asks farmers to begin thinking of ways to reduce agricultural emissions. Some options available include planting forests, using fertilisers more efficiently, using nitrogen inhibitors, and improving productivity. The New Zealand Government's 'Climate Change Information' website states that for an average dairy farm, the planting of 6 hectares of Pinus Radiata would "offset the cost of the ETS from 1 July 2010 to 31 December 2012".
What are Fonterra's Obligations?
Fonterra is required to monitor, calculate and report emissions. Fonterra is also responsible for reporting on farm emissions. The ETS will require Fonterra to buy emissions units equal to its total reported emissions each year. To reduce costs, Fonterra has invested in research and development programmes and has implemented various business reduction policies.
Government Assistance to the Agricultural Sector
An issue for the agriculture sector is that methane and nitrous oxide are more efficient at trapping the sun's heat than carbon dioxide and therefore pastoral production contributes to the release of gases which in turn has a greater impact on global warming than other sectors. In an effort to keep the agriculture sector competitive with other countries the Government will provide processors such as Fonterra with 90% of its emissions units to keep it competitive with overseas competitors. This means that Fonterra will need to purchase 10% of its emissions units. The allocation from the Government will reduce by 1.3% per year.
Should farmers require further information on the ETS, the "Fonterra Guide to Climate Change" is an excellent starting point and can be found on the <a href="http://www.fonterra.com/wps/wcm/connect/fonterracom/fonterra.com/Our+Business/Sustainability/Climate+Change/">Fonterra</a> website. Sun, 01 Aug 2010 16:55:00 -0500 http://www.saunders.co.nz/emissions-trading-scheme-in-the-agricultural-sector/ Shake Up for Legal Aid http://www.saunders.co.nz/shake-up-for-legal-aid/ <img class="left" src="http://www.saunders.co.nz/assets/Uploads/_resampled/ResizedImage352239-legalaid2.JPG" width="352" height="239" alt="" title="" />The Government hopes that proposed changes to the Legal Aid system will improve public confidence and give taxpayers value for money.
Legal Aid is available under certain criteria to those who are unable to pay for their legal representation. Its provision is based on the premise that all people should have the opportunity to have legal representation.
In 2009 there were 85,156 Legal Aid grants at a cost to taxpayers of $131 million with administrative costs reaching $20.4 million.
&nbsp;
In late 2009 a damning report on the Legal Aid system was released by Dame Margaret Bazley. The report found a number of issues with the current system that were leading to system-wide failings. Some of these issues were:
<ul class="unIndentedList">
<li>cumbersome administrative procedures,</li>
<li>inflexible procurement provisions, which prevent the Legal Services Agency from reducing the administrative burden and taking advantage of efficiencies,</li>
<li>an over-reliance on complaints as a measure of lawyers who were failing to perform,</li>
<li>poor relationships between the Legal Services Agency and the New Zealand Law Society, and</li>
<li>the Legal Services Agency having a strong operational focus, rather than direction setting to ensure legal services are efficient, effective and sustainable.</li>
</ul>
The report found that the Legal Aid system was open to abuse by both lawyers and defendants. It recommended a number of changes that culminated in the Government announcing, on 7 April 2010, a comprehensive package of reforms for legal aid services. The changes include:
<ul class="unIndentedList">
<li>A requirement that lawyers demonstrate competency, based on objective criteria, to a selection committee to gain accreditation and that lawyers will have to re-apply after a fixed term.</li>
<li>A Performance Review Committee will be established to consider concerns or complaints raised regarding lawyers performance and to impose sanctions.</li>
<li>The functions of the Legal Services Agency will be moved into the Ministry of Justice and an independent statutory officer will grant Legal Aid.</li>
<li>The Public Defender Service will be expanded into Christchurch, Hamilton and Wellington. This will decrease costs by providing criminal legal services through salaried staff rather than contracted lawyers.</li>
<li>Transparency in decision making will be encouraged by the replacement of the Legal Aid Review Panel with a Legal Aid Tribunal.</li>
<li>Consistent standards for all community law centres will be established.</li>
<li>The duty lawyer scheme will be improved by an enhanced selection criteria and by appointing supervisors.</li>
<li>A streamlined eligibility assessment process will be introduced for high-volume, low-cost criminal cases, and</li>
<li>A change to the preferred lawyer process, which will identify when a person can choose a Legal Aid lawyer and when one will be selected for them to ensure that the lawyer is competent for the case.</li>
</ul>
There will be no changes to Legal Aid funding for Waitangi Tribunal claims, however, administrative functions will be improved.
In announcing the changes, the Hon. Simon Power MP stated that it is hoped the changes will provide quality services for those who need it, give taxpayers value for money and build public confidence in the Legal Aid system. Sat, 01 May 2010 16:55:00 -0500 http://www.saunders.co.nz/shake-up-for-legal-aid/ Criminal Recovery (Proceeds) Act 2009 http://www.saunders.co.nz/criminal-recovery-proceeds-act-200/ <img class="left" src="http://www.saunders.co.nz/assets/Uploads/_resampled/ResizedImage355227-Criminal1.JPG" width="355" height="227" alt="" title="" />The Criminal Proceeds (Recovery) Act 2009 (the 'Act') came into effect in December 2009. The stated objective of the Act is to "provide a legislative framework for the confiscation of property from persons who have engaged in or profited from criminal activity". The underlying premise being that a person should not be allowed to benefit from criminal activity. It is reported that since the Act's introduction the police have seized $11 million of the identified $36 million worth of assets that they believe have been obtained through criminal activity.
The Act has repealed the Proceeds of Crime Act 1991, and introduced a new civil forfeiture regime similar to those introduced in the last decade in Australia, Canada, Ireland and the UK. Under the new Act, the Serious Fraud Office is now able to apply to the High Court to freeze a person's assets and then apply for a forfeiture order to seize the frozen money or assets. The Crown must prove, on the balance of probabilities, that the person has benefited from significant criminal activity, whether the offending has been proven in Court or not. Unless the person can prove the assets in question have been acquired legitimately, they will be forfeited.
The Act allows criminal gangs to be stripped of their assets and the profits of their criminal activities. The recovered proceeds are then returned to the Crown who in turn have stated they will use them to fund anti-P initiatives, expand police and customs initiatives to combat gangs and provide additional drug treatment programs. The police say this will be a major step in assisting them to dismantle organized crime. It is also hoped that the stripping of assets will act as a disincentive to criminals and will disrupt their ability to finance future illegal activity. Sat, 01 May 2010 16:55:00 -0500 http://www.saunders.co.nz/criminal-recovery-proceeds-act-200/ Unfair Parking Ticket? http://www.saunders.co.nz/unfair-parking-ticket/ <img class="left" src="http://www.saunders.co.nz/assets/Uploads/_resampled/ResizedImage269403-PARKING1.JPG" width="269" height="403" alt="" title="" />To successfully challenge a parking ticket, read the ticket carefully to ensure all of the details are correct including:
<ul class="unIndentedList">
<li>make, model and registration number of the vehicle</li>
<li>description of the location of the ticketed vehicle</li>
</ul>
Next look for any signs in the vicinity relating to the car park to ensure any signage is clear and unambiguous.&nbsp;
If details on the parking ticket are incorrect or signage, including yellow lines, are unclear for any reason, you may have grounds to apply to have the ticket overturned. Sat, 01 May 2010 16:55:00 -0500 http://www.saunders.co.nz/unfair-parking-ticket/