Edmonds Judd

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Are Uber drivers employees and why does that matter for you?

Commercial, Employment, First Job, Uncategorized, Your Own Business
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A case from the Court of Appeal on Monday acts as an urgent reminder that you can’t contract out of the Employment Relations Act (the Act) and that includes by calling the relationship an independent contract when it is not. The case involved four Uber drivers and the companies that own and run Uber Drive and Uber Eats.

Uber argued that they were not employers but provided an introduction service. Interestingly, adapting to new ways of working, the Court held that the drivers were all employees when they were logged in to the Uber Drive App.

Using an independent contractor rather than taking on an employee is attractive because it cuts out a whole swathe of costs, paperwork, responsibility and inconvenience: holidays, sick leave, termination issues and PAYE to name a few.  If you get the nature of the relationship wrong however, it can have an enormous impact on the employer: investigation, prosecution, fines and penalties, PAYE arrears, holiday pay arrears and much, much more.

So how do we know when a relationship is actually employment if we can’t rely on what the parties themselves agree in the contract? The answer is section 6 of the Act. Section 6 requires the court to focus on the realities of the parties’ mutual rights and obligations. In particular: how is the relationship working in practice (especially if that differs from the contract)?

Three key issues that the Court must weigh up are:

  • the extent of the control over the worker,
  • the degree of integration of the worker into the business, and
  • the “fundamental test” of whether the worker is carrying on their own (independent) business.

 The Uber case in particular emphasised Uber’s control of the workers which included Uber controlling fare setting and performance management, and right to discipline. They looked at the practice as it varied from the contract: even though the drivers could theoretically choose when and where they worked, they were penalised for not working regularly. They were not an independent business as the drivers were restrained by Uber from expanding their business. For example, there was a ban on contacting clients independently.

This situation might not be substantially different from many ‘independent contracts’ on our farms or in a small business setting.

If you have an independent contractor and that worker only works for you (perhaps because you do not permit subcontracting or them taking on other jobs, or simply because the job takes up all available time), if you can dictate what that worker must do from day to day and how they do it, if you can discipline them, if they work on your site and you provide most of the equipment, then it might be time to take a second look and seek independent professional advice.

Nicolette Brodnax
Nicolette Brodnax, Special Counsel

Postscript

Latest news, News, Uncategorized, Your Own Business
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Holidays Act 2003 to be overhauled

 

Both employers and employees will be relieved that the government is prioritising overhauling this legislation.

“Change has been a long time coming, and I know there are many who are frustrated with the Holidays Act. We need an Act that businesses can implement, and that makes it easy for workers to understand their entitlements,” said the Minister for Workplace Relations and Safety, Brooke van Velden.

 

The government will develop an exposure draft of the new legislation for consultation. It has indicated that the previous government’s decision to double sick leave entitlements for all eligible workers has caused difficulties to some businesses and increased the disparity between part-time and full-time workers. As well, employers have long struggled with apportioning annual leave; an accrual system is mooted, rather than the current entitlements system.

 

It is expected that the exposure draft of the Holidays Bill will be released for targeted consultation in September. “I believe it is important to hear from small businesses in particular, given small businesses will adopt a range of working arrangements and often do not have the same payroll infrastructure as larger organisations,” the Minister added.

 

Although registration for targeted consultation closed on 8 July, we will keep you up-to-date with how this new legislation progresses.

 

Roadside drug testing to be rolled out

 

In May, the Minister of Transport, Simeon Brown, indicated the government will introduce legislation that will enable roadside drug testing to improve road safety.

 

“Alcohol and drugs are the number one contributing factor in fatal road crashes in New Zealand. In 2022, alcohol and drugs contributed to 200 fatal crashes on our roads. Despite this, only 26% of drivers think they are likely to be caught drug driving,” said the Minister.

The legislation is likely to be introduced mid-2024 and passed towards the end of the year.

 

 

 

Visual artists will receive royalties when work on-sold

Long-awaited legislation that comes into force on 1 December 2024 will allow New Zealand’s visual artists to receive royalties when their work is sold on the secondary market.

 

Passed in August last year, the Resale Right for Visual Artists Act 2023 will enable the collection of a 5% royalty each time an eligible artist’s work is sold on the secondary art market. The scheme is for artworks that sell for $1,000 or more. The collection agency, Copyright Licensing New Zealand, will deduct a percentage of the royalty as an administrative fee.

 

 

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Avoiding scams

Latest news, News, Uncategorized
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Tips to protect yourself

Every year thousands of people fall victim to scams through emails, phone calls and text messages. Scams are fraudulent schemes designed to deceive you and steal your money or personal information.

 

The danger of scams lies in their ability to look and sound genuine – at least until it’s too late. Scammers are becoming more cunning, often using technology and psychological manipulation to trick you. Fortunately, there are a few easy steps that can help you.

 

 

Phone scams

Scammers often try calling and pretending to be from your bank. They usually create a sense of urgency, claiming there are issues with your bank account such as unusual account activity or overdue fees; scammers will make you think that the matter needs immediate attention.

 

To spot a phone scam, be wary of unexpected calls that ask for personal information such as your account details or your passwords. Most organisations do not request sensitive information over the phone. An easy way to verify if the call is genuine is to hang up and call back using the official number.

 

 

Text message scams

Text scams are when you receive messages designed to trick you into providing personal information or clicking on malicious links. These messages might say they’re from your bank, a courier company or even your insurer. They often contain urgent requests to verify your account, claim a prize or resolve a problem.

 

To protect yourself from text scams, never click links or respond to messages from unknown numbers. If you receive a message claiming to be from an organisation, call them directly and check.

 

 

Email scams

Email scams, or ‘phishing’ emails, are a common way scammers try to steal personal information. These emails, similar to texts, appear to be from your bank, a courier or even a shop. Like many scams, they are often ‘urgent’ and ask you to update your account information, reset your password or review suspicious activity.

 

Don’t click on links or download attachments from unknown or suspicious emails, especially if you’ve never heard from them before. Organisations will never ask (or should not ask) for sensitive information by email.

 

 

Key points

We are exposed to scams more and more in today’s world. To keep yourself safe:

  • Be suspicious – who is contacting you and why?
  • Don’t trust any unexpected contact
  • Resist the urge to act immediately, despite what the message says
  • Never open attachments or links if you’re not sure where they’ve come from, and
  • Trust your instinct! If something doesn’t feel right, it probably isn’t.

 

Staying vigilant and informed is crucial in protecting yourself from scams.

If you think you’ve received a text or email that you think is a scam, you can report it to the Department of Internal Affairs, following the instructions on its website (www.dia.govt.nz).

 

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Business briefs

Commercial, News, Uncategorized
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Five companies sentenced over Whakaari/White Island eruption

In our Summer 2024 edition published in early February, we wrote on the Whakaari/White Island prosecutions brought by WorkSafe; in this Winter issue we report on the court’s late February sentencing.

Almost five years after the Whakaari/White Island eruption that left 22 people dead and 25 others severely injured, the District Court delivered its sentence for safety failings under the Health and Safety at Work Act 2015.[1]

Five companies were collectively fined $2 million for failing to assess and mitigate risk, and three of the five have been ordered to pay a collective total of $10.21 million in reparations to victims and their families. GNS Science was also fined $54,000 for failing to adequately communicate risk to contractors.[2]

Whakaari Management Limited (WML), one of the five companies sentenced and responsible for managing access to the land, was held liable for a significant portion of the penalties. WML has claimed it is unable to pay the penalties as it has no assets or bank account, even though evidence at trial indicated WML received about $1 million annually from island tours. The judge acknowledged he cannot make orders against WML’s shareholders, but appealed to their ‘inescapable’ moral duty to advance the necessary funds – even if this means reaching into their own pockets.

These penalties are a strong reminder for businesses to take seriously their health and safety obligations or risk hefty penalties.

 

Navigating financial distress

What should you do if your business is in rough financial waters? If you feel financial strain creeping into your business, it is important to take action early to address the situation rather than hoping it improves on its own. Below we suggest some options to help you navigate financial distress.

  • Engage with lenders: Communicate transparently with your lenders early on. This will maximise available options and strengthen your relationship. Most lenders are willing to agree to an approach where borrowers are transparent and can demonstrate a plan

 

  • Reach out to suppliers and customers: Have open conversations, where appropriate. Clarity around payment timeframes, late payment fees and other expectations will provide certainty for all parties involved

 

  • Review business contracts: Understand the terms of your business contracts, what obligations are owed and the implications if you default

 

  • Keep directors’ duties in mind: Ensure you are complying with your director duties, including avoiding trading recklessly or incurring obligations the company is not able to perform. You can be found personally liable if you breach your director duties. Maybe you have to make the difficult decision of winding up your business to avoid breaching your duties, and

 

  • Seek professional advice: Speak to your accountant or financial advisor to assess the financial position and solvency of your business. We can also advise on your options at any stage.

 

Commerce Commission win over Viagogo

In a recent judgment, the High Court provided useful guidance on misleading and deceptive conduct, and unfair contract terms under the Fair Trading Act 1986 (FTA). The decision followed a six-year legal battle between Viagogo and the Commerce Commission.[3]

The Commission commenced proceedings against Viagogo in 2018 after receiving thousands of complaints by consumers who had purchased event tickets from Viagogo, only to be refused entry at the events because their tickets were not authentic.

The High Court found that Viagogo had misled consumers in breach of the FTA by:

  • Failing to adequately disclose its status as a resale platform
  • Guaranteeing customers’ tickets to events, when in practice it often refunded invalid tickets after a customer had already missed the event
  • Creating a false sense of urgency for prospective purchasers seeking tickets
  • Disclosing additional ticket fees at a late stage of the purchase process, and
  • Stating it was an official or authorised source of tickets when it was not.

A clause in Viagogo’s terms and conditions requiring customer disputes to be resolved in Switzerland was also found to be unfair and unenforceable.

Viagogo was ordered to correct the misleading information on its website and update its terms and conditions.

This judgment emphasises the importance of using honest and fair trading practices, and ensuring your terms and conditions comply with the FTA.

Viagogo has appealed the judgment.

 

CCCFA update

The government recently announced changes to the Credit Contracts and Consumer Finance Act 2003 (CCCFA) as part of a larger, two-phase financial reforms package to address concerns about the accessibility of credit and burdensome obligations on lenders.

Phase 1: Already underway, this phase includes the removal of overly prescriptive requirements around loan affordability assessments, and exemptions for local authorities and providers of non-financial goods and services (such as certain car dealers).

Phase 2: As this phase is rolled out, it is expected the CCCFA will be updated to further streamline the lending process and continue to support more accessible lending practices.

The Ministry of Business, Innovation and Employment will publicly consult on revisions to the Responsible Lending Code and possible amendments to the CCCFA as they become available.

[1] WorkSafe New Zealand v Whakaari Management Limited, White Island Tours Limited,
Volcanic Air Safaris Limited, Aerius Limited, Kahu (NZ) Limited [2024] NZDC 4119.

[2] WorkSafe New Zealand v Institution of Geological Nuclear Sciences Limited [2024] NZDC 4149.

[3] Commerce Commission v Viagogo AG [2024] NZHC 713.

 

 

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Business briefs

Uncategorized, Your Own Business
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Lego wins trade mark dispute with Zuru

The recent High Court decision in Zuru v Lego[1] is a reminder to all businesses that any use of another trader’s registered trade mark carries significant legal risk. The issue arose when Zuru used the words ’Lego brick compatible’ on the packaging for its Max Build More building brick toys. Lego argued this infringed its registered trade marks.

Zuru attempted to rely on defences that it used Lego’s mark in ‘comparative advertising’ and to ‘indicate the intended purpose’ of its product. The Trade Marks Act 2002 permits the use of another trader’s registered trade mark for these purposes, provided such use is ‘in accordance with honest practices in commercial matters.’ The court rejected the ‘comparative advertising’ defence, finding the statement did not actually compare Zuru’s and Lego’s products in any way.

The court also found that Zuru’s use of ‘Lego’ did alert customers to a characteristic of Zuru’s bricks in that they were compatible with Lego’s bricks, but it was not done in accordance with honest practices. Relevant factors leading to this conclusion included:

  • Zuru intended to gain market share from Lego by selling similar products at a cheaper price
  • There were concerns that Zuru’s actions were a ploy to strengthen Zuru’s legal action against Lego in the USA, and
  • Zuru did not obtain prior consent from Lego or advise Lego of its intention to use Lego’s trade mark.

The court determined that Zuru’s use of Lego in the compatibility statement was a deliberate attempt to leverage off Lego’s established reputation and infringed Lego’s registered trade mark rights.  If you are considering using another trader’s registered trade mark for any reason, we recommend you talk with us early on. Otherwise, you could be on dangerous, and expensive, ground.

 

Start preparing for the Incorporated Societies Act 2022

At long last the Incorporated Societies Act 2022 will come into full force on Thursday, 5 October 2023, replacing its predecessor after 115 years.  Societies can re-register under the 2022 Act from this date, and must do so by 5 April 2026 or they will cease to exist.  When applying to re-register, all societies must file a new or updated constitution that complies with the new legislation.

Other key changes under the 2022 Act include:

  • All societies must have a governing body
  • Officer duties have been set out, and are comparable to, director duties under the Companies Act 1993
  • A person must give consent to become a member of a society
  • Annual general meetings must be held, and financial statements and annual returns must be filed, within six months of the society’s balance date, and
  • Every society must have a dispute resolution process set out in its constitution.

The Incorporated Societies Regulations were released this month. Every society should be drafting or reviewing its constitution in preparation for re-registration. Under s30(A) of the Charitable Trusts Act 1957, existing  trust boards incorporated under that Act, need not re-register under the 2022 Act, but can elect to do so if they wish.  If you need a hand in doing this for your society, please don’t hesitate to be in touch – we are here to help.

 

ESG and directors: The Companies (Directors’ Duties) Amendment Act 2023 becomes law

The Companies (Directors’ Duties) Amendment Act 2023 was passed on 3 August 2023 and is now in force. The legislation clarifies that company directors may consider matters other than profit maximisation when assessing what is in the best interests of the company such as, for example, environmental, social and governance matters.

 

The Act has attracted criticism from, amongst others, the Ministry of Business, Innovation and Employment; the New Zealand Law Society; and the Institute of Directors, with many arguing the new legislation will have a marginal impact, if any.  In any event, it acts as a signpost to directors clarifying that profit maximisation is not the only consideration when discharging their duties to act in the best interests of the company.

 

[1] Zuru New Zealand Ltd v Lego Juris A/S [2023] NZHC 1808.

 

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

School boards of trustees

Kids, News, Uncategorized
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Significant obligations and responsibilities

Every three years, state and state-integrated schools hold elections for parent and staff representatives to join the governing bodies for their schools – the board of trustees (BoT).

School trustees are, however, sometimes confused or unsure about their role, and their obligations and responsibilities. The BoT is not like the PTA committee that co-ordinates parent helpers, organises school events, fundraises, etc.

A BoT role is like that of a company director. Although a school is not a commercial business, it should have robust governance processes in place that align with those of a well-run commercial business.

Health and safety aspects

The BoT is responsible for the governance and management of the school. It has discretion to manage the school within the parameters of the laws of New Zealand.

Alongside this governance approach, the Education & Training Act 2020 (E&TA) sets out the BoT’s obligations under the health and safety workplace laws. The Ministry of Education advises that:

School boards and early learning organisations are considered a PCBU (Person Conducting a Business or Undertaking) and must, so far as is reasonably practicable, provide and maintain a work environment that is without health and safety risks.

(Ministry of Education website)

A BoT is the legal entity that is the PCBU. If there is a health and safety failure at a school, the BoT could potentially face prosecution by WorkSafe under the Health and Safety at Work Act 2015 (HSWA).

The best possible policies, and rigid adherence to them, may still not prevent accidents or injuries from occurring. The potential always exists that actions may be taken that do not comply with the policies and issues that arise. In this situation, it would be fair to say that responsibility would fall on those responsible for those non-compliant actions if the obligations of the BOT are shown to have been fulfilled.

Even if the BoT delegates responsibility for these policies, it has over-arching responsibility for the school staff who are operating under those policies. The BoT must take an active role to ensure that any people under its control are safe, and that suitable guidelines are in place to identify and mitigate the risks being faced. Ultimately, it remains an obligation of the school and BoT to be responsible for their students’ safety.

EOTC risks

Out of school activities or education outside the classroom (EOTC) should be managed and controlled by reference to the BoT-approved health and safety policies.

To be effective, the policies must have measurable risk assessment components. For example: what are the risks and how serious is each risk? What is the likelihood of students and accompanying adults being hurt? How can these risks be managed by the activity leader? Does the school’s policy have a tool for assessing risk and the seriousness of the risk?

When things go wrong on an EOTC trip and a participant is badly hurt, there will be investigations by the police and WorkSafe and, if someone dies, the coroner. It is equally possible that, as the result of those investigations, charges could be laid if breaches have occurred.

Prosecutions

Two recent cases[1] have shown that even with a successful WorkSafe prosecution, the fines awarded have either been reduced to $0, or set at a notional figure and payment has not been sought.

Regarding personal liability of BoT members, both the E&TA and HSWA contain exclusions of personal liability for board members provided that any act or omission was carried in good faith with the performance, or intended performance, of the BoT.

Trustees must fully understand their role

The BoT role is not one to be considered lightly, although training and guidance is available so trustees fully understand their responsibilities. BoTs are full of amazing and dedicated people who are doing their best for their community. A crucial part of that role is ensuring the everyday safety of the students and employees at their school.

Trustees must be aware that with the role comes responsibility and accountability. BoTs must manage their duties accordingly and fulfil all legal requirements.

[1] WorkSafe v Tauraroa Area School Board of Trustees [2022] NZDC 21558 and WorkSafe v Forest View High School Board of Trustees [2019] NZDC 21558

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Tikanga in the law of Aotearoa New Zealand

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Role of tikanga in Peter Ellis’ conviction, death and exoneration

Late last year the Supreme Court quashed Peter Ellis’ multiple 1993 convictions of sexual offending against children who had attended the Christchurch crèche where he was a teacher[1]. His 1994 and 1999 appeals to the Court of Appeal had been unsuccessful. In July 2019, the Supreme Court granted leave to appeal the Court of Appeal decisions giving an extension of time to do so.

However, Mr Ellis died in September 2019 before the Supreme Court heard his case. Usually, an appeal dies with an appellant.

The Supreme Court was therefore asked to deal with a fascinating question: should the appeal continue despite Mr Ellis’ death? Ultimately, the Supreme Court decided that the appeal should go ahead[2]. It was necessary to hold two hearings on separate days to determine that issue. The second hearing concerned, exclusively, the relevance of tikanga Māori to the continuation of the appeal.

The nature of tikanga

Before the Supreme Court deliberated, it was provided with a ‘Statement of Tikanga’ prepared by recognised tikanga experts. The statement began with an explanation of the nature of tikanga. It said that tikanga is the Māori ‘common law’. It described tikanga as a system of law that is used to provide predictability; it is made up of templates and frameworks to guide actions and outcomes. The term ‘tika’ means ‘to be right’. Tikanga Māori therefore means the right way of doing things in Te Ao Māori. It is what Māori consider is just and correct. Tikanga Māori includes all the values, standards, principles or norms that Māori subscribe to, to determine appropriate behaviour.

Tikanga at the heart of New Zealand’s common law

The Supreme Court used the Ellis case to deal with the place of tikanga in the law of Aotearoa New Zealand more generally.  While the Supreme Court was divided on the issue of whether it should allow Mr Ellis’ appeal to proceed after his death, it was unanimous that tikanga has been, and will continue to be, recognised in the development of this country’s common law in cases where it is relevant. Tikanga also forms part of New Zealand law as a result of being incorporated into statutes and regulations. It is incorporated in the policies and processes of public entities and it may be a relevant consideration in the exercise of discretions.

Ascertaining tikanga

A Supreme Court majority held that the colonial tests for incorporation of tikanga in the common law should no longer apply. Rather, the relationship between tikanga and the common law will evolve contextually and, as required, on a case-by-case basis.

The majority judges accepted that tikanga was the first law of Aotearoa New Zealand and it continues to shape and regulate the lives of Māori. Therefore, the courts must not exceed their function when engaging with tikanga. The opinion was expressed that care must be taken not to impair the operation of tikanga as a system of law and custom in its own right. Where tikanga is relevant to a given case, the appropriate method of ascertaining it will depend on the particular circumstances of that case.

Importance of tikanga not confined to Māoridom

The Supreme Court recognised that the Ellis case concerned a Pākehā appellant and, as far as it was aware, none of the complainants were Māori.

It was determined, however, that the principles developed on deciding whether an appeal should proceed after an appellant has died should be capable of meeting the needs of all New Zealanders, including Māori. The court stated that Māori values in relation to the interests of tūpuna or ancestors are different from what are often termed ‘Western values’ that primarily informed the development of the English common law and on which our legal system is primarily based.

Future developments

The Supreme Court’s decision in Ellis will have had an immediate and forceful impact on Mr Ellis’ family, as well as the complainants and their families. However, the examination of the place of tikanga in the law of Aotearoa New Zealand more generally, and the resulting findings, have the potential to place tikanga at the centre of this country’s legal system for all New Zealanders over the course of the next generation.

It can safely be said that when general principles need to be determined from a particular case, tikanga will be considered regardless of whether any of the parties are Māori. Once Māori values touch upon the general issue in question in a way which is distinct from ‘Western values’ it appears tikanga will have to be considered.

Notably the Law Commission, in its Review of Succession Law: Rights to a Person’s Property on Death which predated the Ellis decision, had already recommended numerous changes to New Zealand’s succession law which would mean a much greater recognition of tikanga within it.

[1] Peter Ellis v R [2022] NZSC 115.

[2] Peter Ellis v R [2022] NZSC 114.

 

 

DISCLAIMER: All the information published in Trust eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Trust eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

New Incorporated Societies Act 2022

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Important changes and timeframes

The new Incorporated Societies Act 2022 received Royal Assent on 5 April 2022 replacing the very old Incorporated Societies Act 1908.

 

With 23,000+ incorporated societies in New Zealand, many of us will have some involvement with these organisations and we should be aware of the important changes and timeframes involved in complying with this new legislation.

 

The 2022 Act provides for a transitional period ending on 1 December 2025. By then every existing incorporated society must have decided whether to retain its incorporated status by seeking reregistration. If it opts to reregister, it must check that its constitution (the rules of the society) comply with the requirement of the new Act; failing to register may result in the incorporated society ceasing to be registered and unable to operate.

 

New requirements

The new legislation requires incorporated societies to:

  • Introduce a requirement to have a committee with three or more officers.
  • Specify certain factors that will disqualify a person from being an officer, such as being an undischarged bankrupt or being convicted of a crime involving dishonesty within the last seven years.
  • Introduce duties for officers that will result in them having duties akin to those of company directors. All officers must:
    • Act in good faith and in the best interests of the incorporated society
    • Exercise their powers for proper purposes
    • Exercise the care and diligence that a reasonable person with the same responsibilities would in the same circumstances
    • Not agree, cause, or allow the activities of the incorporated society to be carried on in a manner that is likely to create a substantial risk of serious loss to creditors
    • Not agree to the incorporated society incurring an obligation unless the officer believes on reasonable grounds that the incorporated society will be able to perform the obligation when required to do so, and
    • Not act, or agree to the incorporated society acting, in a manner that contravenes the 2022 Act or its own constitution.
  • Allow a mechanism for members to obtain information from officers to allow for improved accountability of those officers.
  • Provide for certain criminal offences, such as officers dishonestly using their position, fraudulently using incorporated society property and falsifying records, documents or the Incorporated Societies Register.
  • Prescribe that the annual financial statements must be prepared and registered, and prescribe the required reporting standards that are dependent on the size of the incorporated society.
  • Prescribe that large incorporated societies, as set out in the Regulations (still to be published), are required to have their financial statements audited.
  • Have an ongoing minimum number of at least 10 members (the 1908 Act only requires a minimum number on incorporation). Members must consent to become a member and incorporated societies must ensure they have processes to ask for, and record, that consent.
  • Include a dispute resolution procedure in their constitution.

 

These changes are significant. Existing societies should start reviewing their position in light of the new legislation as soon as possible.

 

If you would like some guidance with this process, please be in touch with us. We are here to help.

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Postscript

Health Issues, Uncategorized
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Looking after your wellbeing

In this very hard year, it’s important that we all look after our mental health. The New Zealand Economics Foundation’s (NEF) Foresight Project on Mental Capital and Welbeing research report has created Five Ways to Wellbeing. NEF found that building five actions in to your day-to-day life is important for the wellbeing of individuals, families, communities and organisations.

  • Connect
  • Keep learning
  • Give
  • Be active, and
  • Take notice

To find out more, go here

Put Matariki 2022 into your calendar

Aotearoa/New Zealand’s first Matariki holiday will take place on Friday, 24 June 2022.

The actual day will differ each year depending on the appearance of Pleiades in the sky, although it has been decided Matariki will be celebrated on a Friday to make a long weekend for New Zealanders. In 2023, Matariki will be celebrated on Friday, 14 July.

The Pleiades are a cluster of stars that rise in midwinter and mark the start of the Māori New Year. Some iwi name this time of the year Puanga, after a bright star that is above and to the right of the Matariki constellation.

Stay safe this summer

After another torrid Covid year, we are all looking forward to a sunny (and healthy) summer break. Remember, if you’re boating, driving, bush walking, swimming or enjoying your backyard this summer, please stay safe, look out for others and enjoy relaxing in our beautiful country.

Merry Christmas and a Happy New Year

We wish you all a very Merry Christmas and a happy, safe and healthy 2022.

Meri Kirihimete me te Hape Nū la.

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2021.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

 

Lease vs licence

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Common contractual arrangements in commercial property

Choosing the premises from which to operate your business can be daunting; it is essential that you know you are entering into the right type of agreement to suit your intentions.

Leases and licences are common contractual arrangements. Although both are similar, there are crucial differences between them which can have significant implications for anyone who owns or occupies commercial premises. Knowing their differences, and when to use each, will help prevent any confusion, conflict or loss that may arise if you are not fully informed.

Possession or occupation?

The essential distinction between a lease and a licence is the type of rights they grant in relation to the property. A lease grants you exclusive possession of the property, but a licence only grants the right to occupy and use the land.

‘Exclusive possession’ in a lease situation means you can exercise control over the property and exclude all others from it, even the owner of the property, except where they have a legal right to enter the premises, for example to complete repairs or inspections. Occupation, however, is a right to use the property for a certain purpose and does not give you the right to exclude other people from it.

A lease typically grants much wider rights than a licence because it gives you control of the property subject to some exceptions. The obligations imposed on you under a lease may be extensive, but provided you are not in breach of the lease, possession of the property will stay with you. Under a licence, however, the opposite is the case. Control and possession of the property stays with the owner except where you are granted certain limited permissions.

This is the main area where difficulties can arise in defining leases and licences because the name of the document may not reflect its true nature. It is not just a case of what language is used, but rather the content of the agreement, and the rights and obligations it creates.

Certainty of term

The length of the arrangement is another important point of difference. Leases are typically long-term arrangements and must be for a fixed period and have certainty around the start and end date. Even a periodic lease has clear terms about how and when it can be ended.

A licence, however, can be for an uncertain period and, depending on the terms of the licence, can be cancelled by either party by giving written notice. The advantage of a lease is that it gives both parties more security because the length of the arrangement is certain, but this in turn means it offers less flexibility than a licence.

Changes of ownership

A lease is a legal interest in land and will survive changes in ownership if the owner sells the property. For example, if a commercial building has a tenant under a lease and is sold, the buyer buys the building with the tenant in place. The tenant can also assign the lease to another party with the owner’s consent through a deed of assignment without the new tenant having to enter a whole new lease.

A licence is different. It is a personal contract between the owner and licensee and generally cannot be transferred to another person. If the owner sells the property, the licence will come to an end.

Both have advantages

The crucial factor that distinguishes a lease from a licence is the scope of the rights, powers and obligations it grants or imposes. A lease generally gives you very wide powers to deal with the land and exclude others from it and anything that falls short of this is generally a licence.

Deciding whether to enter into a lease or licence will therefore depend on your intentions for the space. If you want long-term security and exclusive control over the property a lease will usually be preferable, but it comes with maintenance and other obligations and is generally a longer-term commitment.

A licence may be more suitable for short-term use where more flexibility is required or where the parties are still uncertain about their commitment to the arrangement. A licence is useful, for example, where you have a pop-up shop or use a space that is shared by multiple users.

The important thing is to get good legal advice before you sign on the dotted line so that you can be sure of the rights and obligations you are taking on, and the agreement fits your particular situation.