Category Archives: Uncategorized

I’m separating – do I really need a lawyer?

When a couple (married, civil union or de facto) separate there is a lot to organise. Often, the last thing people want to do is to see a lawyer to divide their relationship property, however reaching an informal agreement between you, may mean you miss out on understanding all of your entitlements, or your obligations.

The Property (Relationships) Act 1976 encourages parties to reach agreements without having to go to court. A one off meeting can set you up to reach your own agreement without the full service assistance of a lawyer. However, if you want your agreement to be in writing (and often the bank will require this in order to refinance one party to pay out the other) there are very strict rules in regards to requirements that must be complied with for an agreement to be binding. For an agreement to be binding, it must be in writing and both parties must have had independent legal advice from their own lawyer before signing the agreement. The lawyers witnessing the agreement must provide a certificate that they have explained the effect and implications of the agreement to their client. If these formal requirements are not met, either party could seek to set the agreement aside in the future.

The starting presumption is that property will be shared equally where there is a qualifying relationship. There are exceptions such as where there are short relationships (under 3 years), where an inheritance has been received by one party, or the parties have children.

If there are trusts involved, the matter is less straightforward as trust property is not relationship property. If there is a trust involved we recommend you see us for advice as the circumstances vary from couple to couple.

Haigh Lyon are able to help you throughout all stages of the separation process and are available to assist you to reach a fair and enforceable agreement with your former partner. If you would like to discuss your needs please do not hesitate to get in touch with one of the team.

Understanding the Government’s recent housing announcement

The government has unveiled its highly anticipated plan to ‘turn down the heat’, in the property market and slow the ever rising house prices.

This article proposes to provide you with an overview of this plan. While these proposed changes remain subject to consultation and amendment prior to being introduced into legislation, given the current political landscape, it is likely that this plan will be put into place as announced.

Irrespective of the above, some key dates announced as part of the plan occur as early as this Saturday, and so we feel that it is important to provide you with an overview of the changes as they stand as they may affect a range of decisions, particularly with respect to property investment in the coming months.

Tax Implications for Investors

Perhaps the biggest blow to investors to come from Tuesday’s announcement is the removal of interest deductibility for residential investments for properties purchased after 27 March 2021. This change will take effect from 1 October 2021 and means that the majority of investors settling property purchases after this Saturday will no longer be able to offset their interest costs against rental income for tax purposes.

Of significance is the suggestion that new builds will be excluded from this rule, and as such, investors will still retain the ability to offset interest costs in this way, on the basis that the property purchased is a new build.

For those who already have investment properties, this change will not take effect immediately. It will be phased in over the next fice years with the intention that from 1 April 2025 no investors will be able to offset interest costs, save for those properties captured by the suggested new build exemption.

The objective here is to ‘level the playing field’ for first home buyers who are currently competing with investors to purchase existing residential property.

When a Property is Acquired

Given the impending changes, the date on which you may consider a property as ‘acquired’ will play a key role in whether a purchaser will be caught by this new regime.

For tax purposes, a property is generally considered as ‘acquired’ on the date a binding sale and purchase agreement is entered into.

This means that if you entered into an unconditional agreement for sale and purchase prior to the announcement on 23 March 2021, then you can treat the property as being acquired prior to 27 March 2021 and accordingly still fall within the old regime.

First Home Buyers

The plan as outlined by the Prime Minister, Jacinda Ardern, and the Finance Minister, Grant Robertson, also makes a number of changes to existing regimes, some of which target those who are purchasing their first home. Briefly, these include:

  1. First Home Grants, will be available to a larger range of New Zealanders. This has been achieved by:
    • raising the caps of house prices captured by the system;
    • raising the maximum household income for applicants; and
    • lowering the deposit required to only 5%.
  1. A fund of $3.8 billion has also been put into a ‘Housing Acceleration Fund’ aimed at accelerating housing supply in both the short and medium term and also footing the bill for infrastructure to support housing development. No further information has been provided as of yet with respect to timelines or targets.

Bright-Line Test – From Five years, to Ten Years

In addition to the changes contemplated above, the government also announced an amendment to the timeframe for the bright-line test. This amendment will affect the way tax is charged on capital gains earned from investment properties.

The bright-line test, as it currently stands, applies to the sale of residential land which was acquired after 1 October 2015. This test provides that if residential land has been acquired after that date and then on-sold within five years, any capital gains made on that sale will be taxable. The main exclusions to this rule are where the property concerned is a main home, inherited land, or transferred due to a relationship property agreement.

As a result of the announcement on Tuesday, the government is intending to double this length of time from five years to 10 years from 27 March 2021. Investors will accordingly need to retain their investment properties, purchased after 27 March 2021, for a period of 10 years in order to avoid the conditions of the bright-line test. Interestingly, however, the test will remain at the original five years for new builds purchased after 27 March 2021.

The current exclusions to this regime being main homes, inherited land or transfers as a result of relationship property agreements will likely remain in place, however it’s important to note that the ‘main home exclusion’, may only be used twice in any two year period.

Change of Use of Residential Property

In addition to the above changes around the bright-line test, the government also intends to introduce rules around the change of use of a main home.

Any residential property used as the owner’s main home for their entire ownership will remain exempt from the bright-line test.

For newly acquired residential properties, including new builds, the government will introduce a ‘change of use’ rule. This rule proposes to change the way tax is calculated if the property was not used as the owner’s main home for more than 12 months at a time during the applicable bright-line period.

If a property owner switches their property from their main home for a short period, being less than 12 months, then they do not need to count that as a change of use and this period will be considered as the property remaining the main home.

If the property owner switches the property from their main home for a period longer than 12 months, they will be required to pay income tax on a proportion of any capital gains based on the length of time the property was not used a main home. The intention is that this new rule will make the tax calculation fairer when it comes to changes of use, and gets rid of the current ‘all or nothing’ regime.

If you have concerns with respect to any of the proposed changes, or if you would like to discuss your needs in light of them please do not hesitate to get in touch with one of the team at Haigh Lyon.

Farewell to Gerard Molloy

It is with the heaviest of hearts but with the warmest of well wishes that we announce the retirement of Gerard Molloy from the Haigh Lyon partnership.

Gerard assures us he will not be retiring from professional life (just yet) and in typical Gerard fashion is enthusiastically looking forward to his next adventure.

During his time with Haigh Lyon, Gerard has devoted his unbridled enthusiasm to pursuing his clients’ interests, achieving many notable outcomes and helping people navigate some of their most difficult times. Gerard does this with a keen sense of self and authenticity. He will be missed for his vibrancy, sharp intellect and ability to connect with young and old.

The 2021 commercial world is very different to the environment of the last 20 years. Through all the changes, over all the years, the firm has focused on employing the right people who are approachable and understand that great client service and meaningful relationships go hand and hand. Gerard has been an important part in creating the vibrant and cohesive culture that we enjoy today and that has enabled the firm to thrive for generations.

The partners and staff at Haigh Lyon would like to acknowledge Gerard’s significant contribution to the firm and its growth over the years. We will miss the energy, humor and compassion that Gerard has shared with us. From us and from you, our clients, we wish him all the very best.

As a trustee, will my legal fees be covered by the Trust?

As the Trustee of a Trust, there may be times when you face litigation from the beneficiaries, or your co-trustees.

Litigation is often a pricey exercise, even if you are the successful party, so naturally as a trustee you may be thinking, “I’m only facing this litigation because of my position as a Trustee, surely the Trust will therefore fund my legal fees?”.

As a starting point, section 81 of the new Trusts Act 2019 provides that a Trustee may be indemnified out of the Trust property for any expense incurred when acting reasonably on behalf of the Trust. Additionally, the Act states that the operation of that indemnity is to be governed by the rules of common law and equity as they relate to Trusts.

However, the common law (law made by the Courts) muddies the position significantly, and Trustees should not assume that they will receive an indemnity out of the Trust for all litigation. Trustees seeking an indemnity out of the Trust assets for legal fees will need to make a so-called Beddoe Application. A Beddoe Application is an application to the Court by Trustees seeking directions for how to act. In this case, the Beddoe Application would be dealing with whether the Trustees could correctly use the Trust assets to indemnify themselves for legal fees prior to the proceedings.

These principles will also apply to executors of an estate, who are effectively Trustees of that estate.

Trustees can traditionally be indemnified from the Trust fund if they can meet three requirements:

  • Show that the cost arose from an act within the scope of the Trustee’s duties;
  • Was incurred in carrying out an obligation of the Trustee; and
  • If in the circumstances the expense was reasonable.

Further, the Court of Appeal in Pratley v Courteney considered that litigation against Trustees generally falls into one of three categories:

  1. Proceedings brought to seek the guidance of the Court on aspects of Trust administration or construction. For example, proceedings in relation to a dispute between Trustees as to how Trust property should be invested;
  2. Proceedings brought by third parties against the Trust. For example, proceedings brought by a creditor of the Trust to enforce payment;
  3. Proceedings brought by beneficiaries disputing the correctness of actions taken or not taken by Trustees. For example, proceeding brought by beneficiaries alleging that a Trustee took Trust property for their own benefit (this is often called “Hostile Litigation”).

Courts have considered as a general rule that Trustees can make (and will often be granted) a Beddoe Application to seek the directions of the Court to use the Trust funds to defend a claim made under the first two categories. In the case of the third category, Hostile Litigation, where the Trustees are effectively defending the correctness of their own actions, Courts have considered it is not appropriate for the Trustees to have their legal fees indemnified by the Trust until the Court establishes the correctness of the Trustee’s actions.

If, in the Hostile Litigation, Trustees’ actions are upheld by the Court, generally speaking the High Court Rules provide that the unsuccessful parties should pay the winning parties’ costs; any shortfall will likely be made up from the Trust assets. On the other hand, if the Trustee’s actions are not upheld, the Trustees will not be entitled to an indemnity from the Trust assets, and will be personally liable.

However, this analysis can only occur after the fact; until the conclusion of proceedings a Trustee defending the correctness of their conduct will have to wear the cost of their legal fees.

In the case of Pratley an executor was defending proceedings from a creditor of the estate (the son of the testator, who was also a beneficiary of the estate) who had funded the palliative care of the deceased during his final days. The Court considered that this claim fell into the second category, as although the individual bringing proceedings against the executor was a beneficiary, the claim was brought in the context of a creditor-debtor relationship.

A more recent High Court decision, Mclaughlin v Mclaughlin, involved the Trustees defending proceedings brought on a variety of grounds, including; for the removal and replacement of Trustees on the basis of mismanagement and breach of fiduciary duties, seeking direction from the Court as to the investment and distribution of Trust property, and alleging breach of Trust and fiduciary duty by the Trustees.

The Trustees made a Beddoe Application seeking their legal fees to be indemnified out of the Trust assets for all the proceedings. The Court held that the only claim for which the Trustees were entitled to be indemnified from the Trust assets in respect of legal fees incurred were the proceedings seeking directions as to the investment of Trust property.

The Court justified this on the basis that Beddoe Applications should only be granted where granting that application was in the best interests of the Trust. The Court considered that indemnifying the legal fees of the Trustees where breach of trust was the issue was unlikely to be in the best interests of the Trust until the Trustees actions’ were upheld (i.e. the allegations of a breach of trust were found to be unsubstantiated).

Mclaughlin has since been followed in another High Court decision, In Re McCallum. In McCallum, the executors of an estate were defending a variety of claims including breach of trust, knowing receipt of estate assets, and an application to remove the executors. The Court further considered that factors contributing to whether the Beddoe Application was in the best interests of the estate included:

  • The nature of the claim;
  • The nature of the Trust; and
  • The substantive merits of the claim.

The Court granted the Beddoe Application fully only in respect of the proceedings relating to breach of moral duty (a claim against the estate that the applicant had not been adequately provided for in the will), and in respect of the application to have the executors removed (but only because the application laid down no clear legal or factual basis justifying the removal of the executors).

Before taking on the responsibility of becoming a Trustee, or before making decisions in your capacity as a Trustee, it is important to understand the full implications of these decisions. As discussed above, a Trustee who needs to defend themselves from litigation because of their role as Trustee will not necessarily be able to rely on the Trust assets to provide an indemnity for their legal fees.

Haigh Lyon can provide further information and advice to assist you in making decisions that will reduce the risk of facing so-called Hostile Litigation, and the risk of being saddled with legal fees as a result of this.

Company law changes during Covid-19

As the impact of the COVID-19 outbreak continues to play out, companies and their directors are faced with difficult choices about how to respond in an uncertain trading environment.

The Minister of Finance has announced certain temporary changes to the Companies Act 1993 (the Act) to assist companies that are facing insolvency due to COVID-19.

Some key takeaways of the proposed changes are that:

  • Some directors duties under the Act will cease to apply if a company trades while insolvent for the next 6 months provided that certain criteria are met including that the company can pay its debts within the next 18 months.
  • If half of a company’s creditors agree to an across the board payment proposal, a six month moratorium can be placed on the enforcement of payment of debt by any of the company’s creditors.

Safe harbour
The current position under the Act is that directors can be personally liable if they:

  • agree to, cause or allow the business of the company to be carried on in a manner likely to create a substantial risk of serious loss to the company’s creditors (Section 135 (Reckless trading)); or  
  • agree to the company incurring an obligation unless they believe at the time on reasonable grounds that the company will be able to perform the obligation when it is required to do so (Section 136 (Duty in relation to obligations)).

These provisions are designed to ensure that directors take steps to reduce the potential losses to creditors once they become aware that there is no longer a reasonable prospect of the company avoiding insolvency. In the uncertain trading environment resulting from COVID-19, these provisions would place a number of directors under pressure to liquidate businesses that were otherwise operating smoothly.

Directors’ decisions to continue trading, as well as decisions to take on new obligations over the next six months will not result in a breach of the duties in section 135 and 136 of the Act, if:

  • in the good faith opinion of the directors, the company faces or is likely to face significant liquidity problems in the next six months as a result of COVID-19 on them or their creditors;
  • the company was able to pay its debts as they fell due on 31 December 2019; and
  • the directors consider in good faith that it is more likely than not that the company will be able to pay its debts as they fall due within 18 months (for example, because trading conditions are likely to improve).

The proposed changes aim to give directors facing significant liquidity problems due to COVID-19, a “safe harbour” from the insolvency duties under sections 135 and section 136 of the Act.

The Minister of Finance has emphasised that the “other protections in the Companies Act, such as those addressing serious breaches of the duty to act in good faith and punishing those who dishonestly incur debts, will remain in place”.  The suspension of the duties contained in section 135 and 136 should not be viewed as a  “get out of jail free” card for any and all actions taken to keep companies operating during the COVID-19 outbreak.

The safe harbour is subject to agreement by Parliament. The Government will ask Parliament that the proposed changes are backdated to 4 April 2020.

Business debt hibernation regime
The Government also proposes to introduce a COVID-19 business debt hibernation regime (BDH regime) to the Act which would allow a company to place a moratorium on debt payments.

The stated intention of the BDH regime is to:

  • encourage directors to engage with creditors to arrive at simple arrangements for the management of debt;
  • allow the directors to stay in control of their companies;
  • provide certainty to creditors that payments will not be clawed back; and
  • be simple and flexible so that it can be easily applied to individual circumstances.

The key features of the BDH regime as outlined to date are set out below:

  • Directors will be required to meet a threshold test before gaining access to the BDH regime. The details of the threshold test have not yet been provided.
  • If the threshold test is met, the directors must notify the creditors of the proposal to place a moratorium on debt payments.
  • The creditors will have 1 month from the date they are notified of the proposal (Notification Date) to vote on the proposal. The proposal will proceed if 50% or more of the creditors (by number and value) agree to it.
  • A 1 month moratorium on the enforcement of debt will come into effect from the Notification Date and a further 6 month moratorium will apply if the proposal is agreed to by the creditors.
  • If the proposal is rejected by the creditors, the directors will still have the range of existing options available to manage debt including continuing to trade or entering into voluntary administration.
  • If the proposal is passed, the BDH regime will bind all creditors of the business, other than its employees.
  • Crucially, during the moratorium the company is allowed to continue to trade, subject to any restrictions agreed with creditors.
  • Any further payments made by the company to creditors will be exempt from the voidable transaction regime. This means that creditors who continue to trade with the company after the entry into the BDH regime will be protected from payments being clawed back if the company is at a later date placed into liquidation (unless those transactions occurred in bad faith).
  • The BDH regime will be available to all forms of entities with legal personality as well as other entities such as trusts and partnerships, but will not be available to licensed insurers, registered banks and non-bank deposit takers and sole-traders.

For more information on the safe harbour and the BDH regime and how these changes may apply to your particular circumstances, please feel free to contact our Commercial Team.

Shared care arrangements

The current circumstances are both unprecedented and difficult. This time of uncertainty is made more challenging by the need to juggle shared care arrangements of children.

The following is intended to be information that parents and caregivers may wish to consider in light of the fact that New Zealand is currently at COVID-19 Alert Level 4.

Best interests of the child
In respect of care of children during this time, the overriding consideration as always is for parents and caregivers to make decisions that are in the best interests of their children. However, it is now important to do this while remembering that the purpose of Alert Level 4 is to prevent the spread of COVID-19.

During this time, it is important to remain, as much as possible, in your self-isolating unit or “bubble”.

In cases where there is a shared care arrangement in place, parents and caregivers will need to consider whether the shared care regime should continue or whether a child should remain in place for the initial four-week lockdown period.

Parents and caregivers should discuss if shared care arrangements would allow COVID-19 to potentially spread without them being aware and reach an agreement between themselves. This may mean the child needs to stay with one parent/caregiver for the initial four-week period.

Maintaining shared care arrangements
The guidance from the Principal Family Court Judge is that children in shared care arrangements in the same community can continue to go between households unless:

  • The child is unwell;
  • Someone in either home is unwell;
  • Someone in either home has been overseas in the last 14 days or has been in close contact with someone who has the virus or is being tested for the virus.

There is currently no definition of “in the same community”. Where the shared care arrangements involve caregivers in different towns, the guidance is that the safety of the children and others in their units should not be compromised by movement between those homes.

Parents and caregivers will need to use their judgement, taking a socially responsible and common sense approach, as to whether the households in a shared care arrangement are in the same community. It is possible that the government may put measures in place to restrict the movement of people other than those considered essential services for the purpose of carrying out those services. Parents and caregivers should consider that travel may be restricted before arriving at their own arrangements in relation to shared care arrangements, particularly if these involve travelling considerable distances to transport children between households.

Factors to consider
It may be possible to maintain the integrity of your bubble across two households for the purposes of maintaining a shared care arrangement. However, it remains important that the integrity of your bubble is not compromised further. The following are matters to consider when thinking about the integrity of your bubble:

  • Are there only two households involved or are there people coming and going from more than two households (for example where there are children from two shared care families being cared for in one household)? The advice from the Principal Family Court Judge is that the safety of all concerned should not be compromised if there are more than two households involved.
  • Are any of the people in either household vulnerable? If so, extra care may be warranted. If your care arrangements involve households where grandparents are also living, for example, consideration may need to be given as to whether people in either household should be going to the supermarket to shop. If online shopping is not possible for both households, alternative care arrangements may need to be considered.
  • Are any of the people in either household essential workers? Essential workers are at higher risk of contracting COVID-19. Shared care arrangements where one of the caregivers is an essential worker (or has close contact with an essential worker) compromise the integrity of the bubble for all households involved in the shared care arrangement. Care arrangements may be need to adapted in the short term to ensure that the integrity of a household’s bubble can be maintained.

Consolidation of care arrangements
Parents and caregivers may also need to consider short term variations to care arrangements to limit the number of times children travel between homes. Parents and caregivers may wish to consider consolidating their care arrangements over this time into larger blocks of time for each caregiver. For example, it may be more appropriate for a child to spend the first two weeks of lockdown with one caregiver and the second two weeks with the other caregiver. This 14-day period would have the advantage of aligning with the recent self-quarantine guidelines for people returning from overseas and may provide some assurance that no one in either household has developed symptoms over that 14-day period. Other consolidation arrangements may also be appropriate.

Movement between households
Where caregivers decide that moving between households is appropriate, children should be accompanied by an adult when moving between homes. Private vehicles should be used to transfer children between households wherever possible.

We would also suggest that where parents are travelling between shared care homes, they have copy of the parenting order or agreement (if one exists) with them (either in hard copy or electronically on a device) in case they are stopped by police.

Indirect contact where children cannot go between households
The Principal Family Court Judge has indicated that where children cannot move between households, she would expect indirect contact – such as by phone or social media – to be generous. The same expectation would apply in cases where care arrangements have been consolidated over the four-week lockdown period.

Priority proceedings and enforcement of existing arrangements
The Family Court is an essential service and will continue to operate through all pandemic alert levels but on a reduced capacity, dealing with priority proceedings.

Priority proceedings in the Family Court relevant to children, include:

  • Urgent matters of safety, such as to protect a person from family violence or to protect a child from unsafe parenting; or
  • Urgent care and protection concerns that require Government intervention for a child via Oranga Tamariki.

Please talk to a member of the Haigh Lyon family team in the first instance if:

  • You are unsure as to whether you have an issue considered a priority proceeding; or
  • Any urgent issues arises for you during this period that may necessitate a priority proceeding.

Caregivers should be aware that the courts will have extremely limited capacity to address enforcement measures in relation to existing care arrangements or parenting orders during the lockdown period (outside of the priority proceeding referred to above). Parents and caregivers are strongly encouraged to reach their own agreements in respect of care of children during this time. However, if they are not able to do so the court will not intervene to uphold existing agreements for the time being unless the criteria for a priority proceeding is met.

Caregivers should nevertheless be aware that the court has indicated that the pandemic should not be seen as an opportunity for parents and caregivers to unilaterally change established care arrangements without cause or otherwise behave in a manner inconsistent with the child’s best interests or the court ordered care arrangements.

Further information and assistance
Caregivers must put aside their conflict at this time and make decisions that are in the best interests of the child and their families and the wider community. We appreciate this may be difficult for caregivers who have been in conflict over care arrangement.

Further information and updates families are referred to the Unite against COVID-19 website (https://covid19.govt.nz/).

Should you require additional advice in respect of managing your share care arrangement during this time, a member of Haigh Lyon’s family team can assist. The Haigh Lyon family team remain available throughout this period working remotely, should you wish to discuss anything via email, phone or online video conferencing.

Mitigating the impact of COVID-19 on commercial contracts

The ongoing Coronavirus (COVID-19) pandemic, and the measures implemented by governments worldwide to contain it are having an unprecedented impact on global financial markets, trade, and commerce.

As businesses deal with the growing impact of COVID-19, a key aspect of a broader risk management strategy, is to review key contracts to understand the risks (and opportunities) that may be presented if contractual obligations are severely affected.  Fortunately, there are various protections available for businesses that are concerned about their ability to meet their contractual commitments.

Does your contract provide force majeure protection?

Force majeure clauses are typically included in contracts in case certain events occur, beyond a party’s control, which prevent it from performing its contractual obligations.  If a force majeure clause is triggered, then the impacted party will have the ability to suspend the performance of its obligations and, in some cases, terminate the contract altogether.

Force majeure clauses typically require a party to establish that:

  • a force majeure event has occurred;
  • the force majeure event was beyond the party’s control;
  • the force majeure event either delayed or prevented the party from satisfying its contractual obligations; and
  • there were no reasonable steps that could have been taken to mitigate the impact of the force majeure event.

Whether a party will be able to rely on the effects of COVID-19 to exercise its rights under a force majeure clause will depend on the nature of the contract, the wording of the force majeure clause, and the impact COVID-19 has had on the parties’ positions.  In our experience, outbreaks such as COVID-19 are typically captured by force majeure provisions.

Caution should be exercised before a contract is terminated in reliance on a force majeure clause.  If a party incorrectly asserts that a force majeure event has happened in circumstances where it is not contemplated by the contract, then the other party can seek damages on the basis that the contract has been repudiated.

Can your contract be terminated on the grounds of frustration?

If a contract does not contain a force majeure clause that is triggered by COVID-19, then the contract may be frustrated by operation of law.

Frustration contemplates that, where a contract has become impossible to perform or radically different than what the parties initially agreed, due to the occurrence an unforeseeable event, then the impacted party is excused from its failure to perform its obligations and the contract is treated as being automatically terminated.

Frustration can apply in circumstances where:

  • a change of law or government directive renders performance illegal; or
  • the purpose of the contract is not able to be fulfilled (for instance, where the contract relates to an event that is no longer going ahead).​

As with force majeure clauses, businesses should be careful before terminating contracts on the grounds of frustration.  If it does not apply, then the claimant may have wrongfully repudiated the contract and exposed itself to a damages claim from the other party.

What other clauses may apply?

It will be important for businesses to review all relevant clauses against the impacts of COVID-19 on their business.  These include:

  • termination provisions;
  • material adverse change provisions; and
  • change in law provisions.

These provisions may provide a party grounds for suspending the performance of their obligations or terminating the agreement.

What steps can businesses take to mitigate risk?

In light of the current uncertainty associated with COVID-19, there are a range of measures that we encourage businesses to take to limit their exposure:

  • Undertake a review of all key contracts to determine whether they contain a force majeure clause and, if so, the conditions for triggering it.
  • Engage, as early as possible, with customers and suppliers to consider alternatives to avoid or minimise the impacts of COVID-19 (particularly as force majeure clauses often include a duty to mitigate the impact of the force majeure event).
  • Make enquiries with your insurance broker as to whether insurance cover is available under a business interruption policy.
  • When negotiating new contracts, carefully consider the potential impacts of COVID-19 (and similar outbreaks) and clearly outline what the parties intend to occur if the contract is affected.

Get in touch

Please feel free to get in touch with us if you would like assistance in assessing how your contractual obligations might be affected by COVID-19 and your available options.

Defending your dog

Unfortunately, New Zealand dog owners are regularly before the courts for the alleged misconduct of their dogs. In 2018 alone, local councils commenced 467 prosecutions in courts across the country under the Dog Control Act 1996, 82 of which resulted in the destruction of the dog.

As an owner (or a person in control/possession of a dog), you can be criminally liable for the actions of your dog. If your dog attacks a person or animal, you can be convicted and sentenced to a fine of up to $3,000 (for the most common offences). If the attack causes injury, there is the possibility of a fine, community work or even a term of imprisonment.

If your dog is involved in an attack, it is likely that a complaint will be made to your local council. The council’s dog control officers will investigate and determine whether there is evidence supporting the complaint and may decide to file charges against the owner.

The council does have discretion in terms of whether or not to file a criminal charge. By engaging constructively with council from the start, you may be able to negotiate an alternative solution for you and your dog. We recommend engaging a lawyer from the outset to provide you with the best prospects of avoiding prosecution. That said, a reasonable rule of thumb is that a prosecution will occur if the dog attack resulted in an injury to person or animal.

Owners are understandably eager to ensure that their dog is returned if the council has impounded their dog following an alleged attack. Before the council can consider returning a dog to its owner, they must decide whether your dog poses a threat to the safety of people or animals if it were released. If the answer is no, you will be given written notice and have seven days to pay the pound fees and claim your dog.

If the council has concerns about the risks your dog may pose, your dog is likely to remain impounded until the case has been heard. As an owner, you can challenge this decision and try to secure your dog’s release by showing that the council does not have reasonable grounds for its position. Legal representation can be of considerable assistance when you are trying to achieve “doggie bail”.

If the council decides to prosecute you as owner, you can plead either guilty or not guilty to the charges. If you plead not guilty, the matter will proceed to a trial before a judge at your local District Court. This is not a quick process, and from the time charges are filed against you, it can take more than a year for a prosecution to reach a trial date.

If you plead guilty to a dog attack charge (or are found guilty following a trial) then the court will sentence you for the offence. While the most likely outcome for an owner is a fine, the court must also order the destruction of the dog, unless it is satisfied that the circumstances of the offence were exceptional.

The exceptional circumstances test has a high threshold. The Court first considers whether the circumstances of the attack were unique, special or substantially unusual. If satisfied the exceptional circumstances exist, then the Court will make an assessment as to the future risk of the dog attacking another person or animal. The Court will consider the nature of the attack, whether there was an injury, the history of the dog owner, past behaviour of the dog, and whether any preventative steps were taken to reduce risk and if so, why these steps failed. Generally speaking, if there is a risk of a further attack, any exceptional circumstances will not be enough to prevent a destruction order.

Whether post-attack factors, such as subsequent obedience training, can be taken into account law remains unclear. We note, however, that a Court of Appeal decision on this issue is due in the near future, so watch this space.

If you find yourself at the centre of a dog control matter, we recommend you engage legal representation as soon as possible. Haigh Lyon has substantial experience in dealing with local council prosecutions and understands the importance of bringing your dog home. We are Auckland based but are able to travel across the country to defend your dog.

Farewell to Rob Wills

It is with sadness that we announce Rob Wills will be retiring from the firm early next year.

Rob is much loved by clients and staff alike.   His zest for squeezing the most out of life is infectious.

Rob joined Haigh Lyon as a partner in 1992 having previously been a partner at another firm.  Like Rob, his clients have been loyal, and followed him to the new firm.  He continued to advise on property, trust and commercial matters, and in the intervening 28 years he has never had a quiet patch.

He was even busier outside the office.  While raising and educating four children, Anna, Nicola, Julia and Jonathan, he somehow managed to find time to run, cycle and swim.  And he did this a lot!

Rob is a well-known figure at endurance events.  He completed the Coast to Coast three times, participated in numerous marathons including the New York Marathon – with a number of his family in tow, smashed three Ironman races and rode Alpe D’Heuz. He also represented New Zealand at three World Triathlon Championships, proudly captaining the team in Chicago.

As many of you know, it is not unusual to see Rob running or biking around Auckland on a Sunday, putting most of us, no matter what age, to shame with the energy and discipline he brings to his training.

He also continues to be an active member of Downtown Auckland Rotary, including a term as president.

The secret to fitting all this in?  Sleeping through law society seminars.  (Rob is famous for nodding off as soon as the presenter begins).  And a loving and supportive wife, Joanne; who is just as much a part of the staff as Rob.

The firm owes a lot to Rob, not only for his legal knowledge and fantastic clients, but also his mentoring and guidance. Haigh Lyon has a unique and supportive culture, and many clients will not be aware of the extra lengths Rob goes to;  whether it involves getting dressed up for a function, presentation of monthly staff awards or getting involved in firm activities like the corporate challenge. A few years ago, a staff member was moving to Australia, so we cleared away the desks, divided the staff into two teams and had a game of indoor cricket between Australia and New Zealand. We needed a surprise streaker so we secretly asked Rob.  In typical Rob fashion he quietly snuck out donned his speedos, a cape and a mask and ran out onto the ‘pitch’, to give a farewell hug.

Rob turned 70 this year, and is going to take some time to travel and hang out with his four grandchildren.  But we expect he’ll still be around the office anytime there’s a morning tea; though hopefully not in his speedos!

It might only be a matter of time before your farming operation is feeling the heat of a council prosecution…

If you haven’t been subject to one you are likely to know someone who has and, despite good intentions, it might be only a matter of time before your farming operation is feeling the heat of a council prosecution.

Unfortunately, they are something of an occupational hazard for farmers – particularly when it comes to the discharge of effluent in dairy farming.

Council prosecutions are nothing like a speeding ticket. The fines imposed by the courts can be in the hundreds of thousands of dollars and have the potential to cripple a business. Farmers should, therefore, have at least a basic understanding of the process and consequence of a council prosecution and know where to turn for help if they find themselves in the hot seat.

Council enforcement action begins with an investigation. That is the information-gathering stage where council officers try to confirm the nature and extent of suspected wrongdoing. Offending on farms often comes to the attention of council officers during routine monitoring of properties. Public complaints are another common way concerns are referred to councils.

Once a council has learned of suspected non-compliance its officers have legal powers to enter private property to collect information and evidence. One important exception, however, is that council officers are not authorised to enter private homes. If council officers want to do that they must apply to a court for an order or search warrant.

If, following an investigation, council officers are confident the evidence they have collected is sufficient to support a prosecution and that such a step is in the public interest, ie, worth ratepayers’ money, then formal charges will be filed in court against the alleged offender.

There are a number of charges available to councils under the Resource Management Act (RMA) and Building Act (BA). Common RMA charges include using land in breach of the district rules, usually doing something without a consent when one was required, and discharging contaminants into or onto water or land. The most common BA charge is doing building work without or not in accordance with a building consent.

For most offences under those acts councils do not need to prove a person or company intended to commit the offence. Usually, it is enough for a council to show that a person or company was responsible for the wrongdoing in terms of having caused or allowed the incident to happen. That does mean the ability to defend a charge is limited. Furthermore, if you or your company employs or contracts others to do work in relation to your property and they fail to comply with the law then you could also be liable for their offending.

There are certainly avenues for defending council prosecutions. Significantly, charges under the RMA and BA must be filed in court within six months of the council learning of the offending or within six months of the date when the council should have become aware of the offending. That could mean, for example, if council officers had been at a property for a building consent inspection and should have observed wrongdoing at the same time then the six month clock would start ticking even if the officers did not actually notice the issue at the time. Charges might also be defended on the basis the action or event triggering the offending was beyond your control and could not have been foreseen, eg, a natural disaster or sabotage.

More often than not council prosecutions are resolved by the person or company charged pleading guilty at an early stage in the proceeding. However, some prosecutions do go all the way to trial.

The usual consequence of pleading guilty or being found guilty of an RMA or BA offence is a fine. The maximum penalty for BA offences, such as building contrary to or without, a building consent is $200,0000 though the penalties actually imposed are generally at or below $20,000.

The most commonly charged RMA offences carry maximum penalties of a $300,000 fine and two years jail for an individual or a $600,000 fine for a company. Fines imposed for RMA offending are often significantly more than for BA offending. For example, fines in excess of $100,000 are not uncommon for offending concerning the discharge of dairy effluent.

Good legal representation at sentencing can be essential for ensuring the fine you are required to pay is reasonable. Individuals or companies pleading or found guilty of BA and RMA offending will also usually receive a conviction on their record. However, it is sometimes possible to apply for a discharge without conviction if it can be shown the consequences of conviction are out of all proportion to the seriousness of the offending. If such an application is successful it usually means you will still pay a fine but will avoid a conviction.

If you or your company are facing a council investigation or a full blown prosecution we recommend seeking urgent legal advice.