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Your Own Business

New retention monies legislation gives better protection

Commercial, Property, Your Own Business
0

Comes into force on 5 October

The Construction Contracts (Retention Money) Amendment Act 2023 was passed on 5 April this year with the legislation coming into effect on Thursday, 5 October 2023.

If your business retains funds as part of a construction contract, or a contractor retains funds from you, you should ensure you are familiar with these upcoming changes.

The primary intention behind the amendments is to provide greater clarity and to strengthen the rules regarding retained funds under the Construction Contracts Act 2002. The government wants these changes to provide more reassurance to subcontractors that they will be paid for work completed – even if a head contractor becomes insolvent.

 

Retention monies must be held separately

Previously, there was no obligation for the business retaining money to hold it in a separate account unless a trust relationship had been created. From 5 October, all funds retained under a construction contract must be held in a separate bank account that meets specific criteria.

This bank account must be held at a New Zealand bank, with a chartered accounting or law firm, or by a trustee company; and the account provider must be told that it is an account holding funds on trust. If you are required to retain funds, you may use that account for multiple contracts (you do not need an individual account for every contract with retained funds), but the account may not be used for any other purpose.

 

Reporting obligations

If you are retaining funds under a construction contract, you will also need to comply with reporting obligations on your retained funds account. If there is more than one party for whom you are holding funds, you must maintain a ledger that clearly indicates whose funds are coming in and out of the account, and report to each party individually.

On receiving funds to be retained, you must report as soon as practical to the party for whom you have retained funds. Your report must include:

  • The amount being retained
  • The date it was received
  • Details of the bank account in which the funds are being held, and
  • A statement that shows the funds in the account, including any deposits or withdrawals relevant to their retained funds.

You also must ensure that you regularly report to all parties; the Act specifies this means at least once every three months. These reports must also be produced promptly upon request from the party for whom you are retaining funds. As well, you may not charge for the administration of producing these reports.

Do note, however, that as the retention holder, you are entitled to the interest on the account; this presumably may help cover the account fees and maintenance.

 

Use of the funds

There must be agreement in place around when the funds are to be accessed. If there are any issues that arise during the contract that would result in the retained funds being used, before accessing the funds the holder of the retained funds must (at a minimum) provide notice of the intention to use the funds and why, and give at least 10 working days to the other party to rectify the issue.

 

Penalties

Significant penalties have been introduced to enforce the new legislation; failing to comply with the retained funds management regime is considered a criminal offence. For each breach of the Act, a company can be fined up to $200,000 and each director can be fined up to $50,000.

Given that these charges are applicable per offence, there are serious financial consequences for non-compliance. The amendment also has added a fine for failure to report, or for false or inaccurate reporting (even if the funds are being held in a compliant manner), of $50,000.

 

Alternatives

Given the new significant penalties and associated additional administration for retained funds, many construction contracts are being amended so that the retention holder obtains a security bond in lieu of a retention. The NZS 3910:2013, that is commonly used by the construction industry, does not set comprehensive criteria for how a bond should be provided or released. Therefore, any contractor who prefers to avoid running a retained funds bank account by using bonds, should carefully (and urgently) review and amend their contracts to ensure they comply with this new legislation.

If you are engaged in construction contracts and would like to discuss your obligations under the new amendments, please don’t hesitate to contact us.

 

 

DISCLAIMER: All the information published in Commerical 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

Mainzeal decision

Commercial, Latest news, Property, Your Own Business
0

Major implications for company directors

Taking on the responsibility of a directorship is not a decision to be taken lightly. For New Zealand directors, the magnitude of the director role has been hammered home with the decision of the Mainzeal case from the Supreme Court in late August.[1]

This decision has sent a strong signal from the New Zealand justice system that directors can, and will be, held personally liable for financial losses experienced by creditors if the directors allow the company to trade recklessly and/or trade while insolvent.

 

About Mainzeal

Mainzeal Property and Construction Limited was one of the largest New Zealand construction companies in the years leading up to its financial collapse.  In 2013, the company went into receivership and liquidation owing unsecured creditors around $110 million. The Mainzeal liquidators believed that the directors of the company had breached s135 (reckless trading) and s136 (insolvent trading) of the Companies Act 1993 and should be held personally liable for the losses of the company’s creditors.

 

Supreme Court decision

While going into the nuances of each of the court hearings is too complex for the scope of this article (the Mainzeal case has been heard in the High Court, Court of Appeal and Supreme Court), it is noteworthy that each court accepted that the directors should be held personally liable to some extent for a breach of their director’s duties.

At the highest court in New Zealand, the Supreme Court, the judges found that the directors should be liable for $39.8 million plus interest payable at 5% pa from the date of liquidation (together more than $50 million). The chief executive of Mainzeal is responsible for the full sum, and the liability of the three other directors was capped at $6.6 million each plus interest.

 

Facts rather than intentions

Critically, personal liability falling on a director due to a breach of directors’ duties under s135 (reckless trading) and s136 (insolvent trading) is a matter of facts, not intentions.

The Mainzeal directors were not accused of any conflict of interest or lack of honesty, and were taken on their word that they acted with good intention while running the company. Regardless, it mattered that on the facts they permitted the company to trade in a way that was reckless and allowed the company to trade while it was insolvent.

 

Companies Act 1993 may need a refresh

Both the Court of Appeal and Supreme Court indicated that a review and update of the Companies Act will be helpful.

The Mainzeal case reinforces to directors the consequences of failing to avoid reckless or insolvent trading, however the current legislation does not provide additional guidance or safe harbour for directors and their decision-making. Adding new guidance for directors’ duties into the Companies Act could enable directors to more confidently navigate the complexities of commercial decision-making with a need for accountability to their creditors.

 

Personal liability

After the announcement of the Supreme Court decision, many directors may want to take a moment to step back and allow the lessons of Mainzeal to sink in. Becoming personally liable for a company’s debts is a significant risk associated with accepting (or continuing) a director role.

Every director of a company should ensure they feel adequately knowledgeable about all key aspects of their company and the sector in which it operates. Accepting a directorship role where there are gaps in skills, or knowledge of the company or sector, can lead to an increased risk that the director may unwittingly allow, or join their other directors in, a decision that permits the company to trade in a reckless or insolvent manner, opening up personal liability and prejudicing creditors.

If you are considering taking on a directorship, you should take independent legal and accounting advice to not only carefully assess whether your skills are a good match for the company and sector, but also to be clear on any potential personal liability.

If you would like some help in assessing whether a directorship is a good fit for you, please don’t hesitate to contact us for further guidance.

 

[1] Yan v Mainzeal Property and Construction Limited (in liquidation) [2023] NZSC 113.

 

 

DISCLAIMER: All the information published in Commerical 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
0

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

Time changed to raise personal grievance for sexual harassment

Commercial, First Job, Relationships, Your Own Business
0

Extended from 90 days to 12 months

The Employment Relations (Extended Time for Personal Grievance for Sexual Harassment) Amendment Act came into force on 13 June 2023. It has extended the timeframe in which a personal grievance (PG) can be raised when sexual harassment has occurred at work.

The timeframe now allows a PG to be raised within 12 months of the harassment occurring or coming to an employee’s attention, rather than the former period of 90 days. The purpose of this amendment is to allow sexual harassment victims more time to come to terms with what has happened before deciding whether or not to raise a PG.

Employment law fundamentals

Employment law in New Zealand is underpinned by the Employment Relations Act 2000; it promotes productive employment relationships and encourages employers and employees to act in good faith in all aspects of the employment environment. This is achieved by specific processes to help parties resolve employment disputes in a quick and flexible way, such as allowing an employee to raise a PG. A PG is a complaint that allows an employer and employee to address, amongst other things, a sexual harassment claim.

What is a personal grievance?

You may raise a PG against your current or former employer if you believe you have been treated unfairly or unreasonably. This includes situations where you think you have been:

  • Unjustifiably dismissed
  • Unjustifiably disadvantaged
  • Discriminated against in your employment
  • Sexually harassed in your employment
  • Treated adversely in your employment on the grounds of family violence, or
  • Racially harassed.

When deciding if an act or dismissal was justified, your employer, the mediator or the Employment Relations Authority must consider what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred.

You can choose to raise a PG with your employer directly or via the Employment Relations Authority. To raise a PG, you have 90 days, or  12 months for instances of sexual harassment, from the date the action or dismissal occurred or from when you became aware of it. You can, however, raise a PG after the 90-day period has expired in other circumstances if your employer agrees.

Defining sexual harassment

Sexual harassment is unwelcome or offensive sexual behaviour that is either repeated or serious enough to have a harmful effect. It can be direct or indirect. Sexual harassment does not have to be physical; it can also be through written, verbal or visual materials/actions. You may only raise a PG for sexual harassment if it has occurred during the term of your employment. Sexual harassment is defined in sections 108 and 117 of the Employment Relations Act 2000.

Know your rights

It is important for both employees and employers to know their rights and obligations surrounding personal grievances. Employers should ensure their employment agreements are updated to reflect the above amendments.

 

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, Property, Your Own Business
0

Update on construction contracts retention regime

In our Spring 2021 edition, we discussed the proposed changes to the retention money regime for construction contracts in light of the introduction of the Construction Contracts (Retention Money) Amendment Bill.  The legislation was passed on 5 April 2023 and it comes into force on 5 October 2023. In brief, the Act will require contractors to place retentions in a trust account with a registered bank in New Zealand (or other accepted form) and keep it separate from other money or assets.

All construction contracts entered into or renewed from that date onwards will be subject to the new requirements.

For more information about how the new legislation will work, please be in touch.

 

New obligations for businesses offering Buy Now Pay Later

The government recently announced it will introduce new regulations to extend the consumer protections in the Credit Contracts and Consumer Finance Act 2003 (CCCFA) to apply to Buy Now Pay Later (BNPL) schemes.  BNPL provides consumers with interest-free credit to buy goods and services and pay for them later. Consumer advocates have raised concerns that BNPL is ‘easy money’, which leads to vulnerable consumers taking on more debt than they can afford to pay back.

The CCCFA imposes certain obligations on lenders to protect borrowers. It does not, however, currently apply to BNPL.  While the new regulations are not yet finalised, it is expected that obligations for businesses offering BNPL will include:

  • Only charging reasonable default fees
  • Varying repayments on request when a consumer suffers unforeseen hardship
  • Offering financial mentoring services to consumers who miss payments, and
  • Being a member of an external dispute resolution scheme.

The new regulations are expected to be introduced to Parliament later this year.

 

Large businesses may need to disclose payment practices

The Business Payment Practices Bill is currently being considered by Parliament and, if passed, will require large businesses to publicly report on their payment practices.  As currently drafted, the proposed legislation will require businesses with more than $33 million (including GST) in revenue for two or more consecutive accounting periods to report six-monthly on their payment practices on both a public register and on their own websites.  Information required to be disclosed will include time taken to pay invoices and the proportion of invoices paid in full. If businesses do not comply with the reporting requirements, they could face fines of up to $500,000.

The purpose of the Bill is to improve transparency for business-to-business payment practices and provide small businesses with information to help with making decisions when engaging with large businesses. The Bill also encourages large businesses to improve their payment practices given its transparent nature.

The Bill is currently awaiting its second reading so there may be some changes before being passed into law. We will keep you up to date with its progress.

 

Are your T&Cs unfair?

The Commerce Commission has filed proceedings in the High Court against holiday home company Bachcare Limited. It alleges that some of Bachcare’s contract terms with consumers are unfair under the Fair Trading Act 1986 (FTA).

The Bachcare contract terms in question are:

  • Regardless of how far in advance a guest cancels their booking the guest may lose up to 100% of the amount paid
  • Service fees are deducted regardless of whether the booking is cancelled by Bachcare or the guest, and
  • Where a booking is cancelled due to an uncontrollable event, such as an extreme weather event, and is unable to be re-scheduled, a guest could lose 100% of the amount paid.

Since 2022, the unfair contract terms regime has applied to contracts between businesses that have a trading relationship with an annual value of $250,000 or less (known as ‘small trade contracts’). The Commerce Commission appears to be increasing enforcement efforts now the regime has been in force for some time.

If you have not already done so, now is a good time to review your consumer terms and conditions, and small trade contracts to ensure they comply with the FTA.

Please contact us if you need help with unfair contract terms.

 

 

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 continuity planning

Commercial, Your Own Business
0

An essential component of running a business

Once reserved for large businesses with a high degree of public dependency, such as banking, hospitals or utility companies, business continuity and disaster recovery plans have become increasingly important for businesses of all sizes. Severe weather events such as Cyclone Gabrielle have increased the importance of planning for the unexpected.

While there is no legal obligation to have such a plan, they help businesses maintain a high level of engagement with clients, customers and staff during times of uncertainty while also creating an environment that is supportive of revenue generation. Good business continuity planning also ensures your legal and compliance obligations are not accidentally overlooked during a time of high stress and uncertainty.

 

What is a business continuity plan?

A business continuity plan (BCP) is also known as a disaster recovery plan or an emergency plan. Sometimes businesses split the plan into different areas that cover their response in an emergency (workplace death or serious injury, active shooter, robbery or sudden loss of digital services), disaster (earthquake, flood or pandemic) and business continuity (how we continue to work once we have responded to the disaster or emergency).

 

Creating a BCP

When creating a BCP it is critical to look at all elements of your business and what could happen in various scenarios. Asking yourself questions will help form the basis of your BCP, such as:

  • What are our key services?
  • How do we deliver our services?
  • What may we lose in a disaster and how can we protect against that loss?
  • Do we need to invest in technology or training for our staff?
  • Who are our key contacts, clients and stakeholders (don’t forget the staff)? We should have a communications plan to be in touch with all.
  • Do our contracts protect the business from unnecessary loss?
  • What do we need to do to safeguard the reputation of our business?

Once a plan is in place, it is essential to test this plan with your staff. Not only do they bring a different perspective, but it also ensures that those people ‘buy in’ to the plan, and are prepared and trained in the BCP so it will work efficiently if you ever need to activate the plan.

 

Regulatory and legal considerations

Employment  

Generally speaking, if your employees are ready and willing to work and, due to no fault of their own, there is no work that can be completed, the presumption is that your employees who would ordinarily be working are entitled to be paid.  This means your BCP should consider how staff can add value to the business during the period. Additional planning should include ensuring that your individual employment agreements anticipate what may be required of your staff during a BCP event.

WorkSafe has been vocal that employers have a responsibility to help manage their employees’ wellbeing. This is especially important during times of increased stress. Your BCP should ensure you have effective communication methods with your staff, including the ways in which the business will support them. This will help ensure that you have taken adequate steps to mitigate additional stresses on your staff.

Privacy  

During a BCP event, without adequate planning and systems in place it is surprisingly easy to breach your obligations under the Privacy Act 2020 when staff are working from home.  Having work-related documentation available in the home to non-employees, as well as access to servers on personal computers that aren’t adequately protected could lead to substantial breaches of privacy.

Availability of information  

Some business documentation must be retained for several years, for example: tax returns, safety audits, professional services audits and so on. In a disaster, if your physical premises are destroyed or inaccessible, how will you comply with the required provision of information?  Since the COVID lockdowns taught many businesses the importance of being agile in a physically restricted environment, it is reasonable to think more regulatory bodies will be intolerant of excuses around a sudden loss of data that was insufficiently backed up.

Storage of information

If your business uses cloud storage of data or remote servers for backups or emergency continuity, care must be taken to ensure all data is stored in accordance with New Zealand privacy laws. If the data is stored offshore, the collector of the data (that’s you or your business) is responsible for ensuring it is stored and handled at a standard comparable to New Zealand’s privacy obligations.

Contract risk

Your terms of engagement or terms of trade should dictate what standard of service you are required to offer your clients or customers during a business disruption.  Equally, when you have contracts with other businesses, you should review their contract terms to ensure they will be sufficiently flexible for you during that disruption.

Preparation is key

A good BCP should help your business prepare in the face of many unpredictable environments, far beyond the basic natural disaster scenario.  The best plans are regularly reviewed, rigorously tested by business owners and staff, and are flexible to adapt to the need at the time.

If you have any questions about BCPs or would like our help in putting one together, please don’t hesitate to contact us. We are here to help.

 

 

DISCLAIMER: All the information published in Commerical 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

Budget 2023

Commercial, Health Issues, News, Your Own Business
0

Key points

With the country expecting a no-frills Budget to match the Hipkins’ government’s bread-and-butter focus on issues for 2023, this year’s Budget had few surprises.

The government has a tightrope to tread in trying to deal with inflation, supporting the recovery from the Covid pandemic, and managing the significant economic effects of the Auckland Anniversary floods and the devastation from Cyclone Gabrielle. The Minister stood by his earlier statement that there would be no tax cuts in this Budget, but there would be increased cost of living support.

Already announced over the last few weeks have been a $1 billion flood and cyclone recovery package, funding for climate change initiatives, and additional funding for education and the New Zealand Defence Force.

On the afternoon of Thursday 18 May, the Minister of Finance, the Hon Grant Robertson, presented the Wellbeing Budget 2023 – Support for today, building for tomorrow.

The Minister focused on four themes:

  • Supporting New Zealanders with the cost of living
  • Delivering the services New Zealanders rely upon
  • Recovery and resilience, and
  • Fiscal sustainability.

We summarise the key points of this year’s Budget.

 

Cost of living support

There is to be free public transport for children under 13 years old, and permanent half-price fares for those under 25 years old. The Minister said, “This will help passengers meet the cost of public transport and encourage increased use, while also supporting New Zealand to achieve its climate change goals.”

The $5 co-payment for prescriptions will be removed from 1 July.

The government has pledged to lower households’ energy costs. It has expanded its Warmer Kiwi Homes Programme providing around 100,000 new heating and insulation installations; 7,500 hot-water heat pumps; and five million LED light bulbs.

For early childhood education, eligibility criteria for 20 hours’ Childcare Assistance has been extended to cover two-year olds, as well as three-to-five year olds. The subsidy rates will be increased. This comes into effect on 1 March 2024.

 

Delivering more reliable services

The government has acknowledged the need to make significant investments to protect and improve public services for Kiwis.

Housing: There is increased funding to deliver 3,000 new state houses.

Education: As announced a week ago, there is a commitment to boost skills, improve achievement, reduce class sizes and increase teacher pay. There will be 6,600 additional student places, and new classrooms and schools to fit them in.

Health: The government is to focus on the effects of winter on the health system; the urgent need for more medical staff (including 500 nurses), and to reduce the massive waiting lists.

There is a commitment to spend more than $1 billion to increase the pay rates and boost staff numbers, and $20 million to lift Covid immunisation and screening for Māori and Pacific peoples.

The Budget includes a range of investments to support Māori and Pacific peoples. These include:

  • Investment of $223 million to improve housing outcomes for Māori. This includes $23 million for an extension to the Te Ringa Hāpai Whenua Fund and $200 million to increase the supply of Māori housing and to repair homes in Māori communities.
  • Supporting whānau and tamariki by expanding Whānau Ora services and support for wāhine hapū in the first 1,000 days of life for their pēpi, and
  • $143 million has been set aside to foster Māori and Pacific language and culture.

 

Recovery and resilience

The government has already announced its package for the recovery and its investment in regional resilience from the Auckland Anniversary floods in late January and Cyclone Gabrielle in February.  There is a commitment for $71 billion across the next five years for new and existing infrastructure investment (schools, hospitals, public housing, rail and road networks), in addition to funding set aside for projects that are still in the planning stage.

Acknowledging the need to rebuild New Zealand’s crumbling infrastructure, $6 billion over a 10-year period has been allocated for a new National Resilience Plan. Initially focusing on ‘building back better’ from the effects of the floods and cyclone, it will also fund the country’s long-term infrastructure deficit, and develop a credible pipeline to support the plan.

 

Fiscal sustainability

Whilst the Minister held fast on his promise not to raise income tax, the trustee tax rate (currently at 33%) will increase to 39% from 1 April 2024 bringing it into line with the top personal tax bracket. The Minister says this will create fairness and remove a potential loophole.

Whilst the Minister confirmed that the country’s economy has emerged from the three years of Covid in a ‘solid position’ – the economy expanded by 2.4% over the 2022 calendar year and modest growth is anticipated for this year – there are headwinds. The continuing impact of the war in Ukraine, and worldwide inflation will affect New Zealand’s economy.

Although inflation peaked at 7.3% in June 2022 and eased to 6.7% earlier this year, rising immigration to this country and the government’s investment in infrastructure projects will increase demand. This may put more pressure on the Reserve Bank to contain inflation.  Whilst New Zealand is not in a recession, recovery from the knocks of the past few years may take longer than anticipated. The government expects the books to return to surplus in 2025–26, a year later than Treasury’s December 2022 forecast.

The 2023 Budget is very much what the government had said it would do – no huge surprises and keeping a firm hand on the tiller to make New Zealand a better country in which to live. The proof, however, will be in the pudding as the year proceeds.

 

To read more detail about the Budget, click here for the Minister’s speech.

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, 2021.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

What is the PPSR?

Commercial, Property, Your Own Business
0

Gives protection when leasing or selling goods

Anyone who has been in business, even for a short time, will have encountered the PPSR (Personal Property Securities Register). The PPSR is a searchable online register that records if a third party has a financial interest in the assets of individuals or entities.

The register only records interests in personal property (not land). Personal property includes all property that is not land or ships.

If you or your business leases or sells goods on credit terms, or if you have lent money to a third party, you should seriously consider registration on the PPSR in order to protect your business or yourself.

Registering a security on the PPSR

It is helpful to look at examples where registration on the PPSR would be appropriate.

  • Leasing assets for a term of longer than 12 months, such as eftpos or photocopier equipment
  • Selling goods on credit terms, for example, payment is due on the 20th of the following month
  • Selling goods on consignment terms where payment is due when the goods are sold, or
  • Making a loan to an individual or a company.

In each of the above situations, registration on the PPSR provides you with protection if rental payments or invoices are not paid or loan payments are not kept up. PPSR registration ensures you will be paid before parties that do not have registered securities.

If you register, you may be able to collect any goods or even trace the proceeds of the sale of those goods. When goods are supplied on credit terms, a ‘super priority’ exists if registration is completed within 10 working days of delivery of the goods. This super priority will have priority over all prior registrations no matter when registered.

What happens if I do not register?

If you don’t register on the PPSR, it may mean that you are not paid in full – or at all.

How to register?

To register on the PPSR you must have a contract with the party you have leased to, sold goods to or lent money. That contract needs to include a right to register on the PPSR.

Timeliness of registration on the PPSR is critical. Where there are two registrations in respect of the same property the first registration will have priority.

Registration is completed online here.

Searching the PPSR

You would search the PPSR if you are:

  • Considering leasing, selling, or lending to a third party to determine what other obligations and registered securities they have
  • Considering buying personal property from a third-party. The most common example of this is the purchase of a motor vehicle. Money may be owed on the vehicle, and without having the security discharged as a condition of purchase, you run the risk of losing the vehicle and the money you paid for it
  • Buying a business that includes personal property as part of the assets
  • Selling a business and you want to determine if any money needs to be repaid, or
  • Buying land with buildings on it that includes chattels.

How long does PPSR registration last?

Registrations on the PPSR expire five years after registration. It is important to note when to renew registrations before they expire. If registrations are renewed, their priority continues from the date of the original registration.

If registrations are not renewed and you subsequently reregister, the priority will be from the date of the subsequent reregistration.

What if things go wrong?

If a person or entity you have leased to, sold goods to or loaned money to becomes bankrupt, goes into liquidation or placed into receivership – what should you do?

Talk with us as soon as possible so we can advise you on your options. If you have registered on the PPSR, your position is stronger than if you haven’t.

Regularly lease, sell goods or loan money to third parties?

We can help you to review your existing contracts or prepare contracts to help protect your business. We can advise you on how and when you should register on the PPSR.  Navigating the PPSR is fairly straightforward. If, however, you have any questions or queries regarding the PPSR and how it benefits or affects your business, please don’t hesitate to contact us.

 

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

Severe Weather Emergency Legislation Act 2023

Rural, Your Own Business
0

Assisting recovery and improving resilience

The severe weather events this year, in particular Cyclones Hale and Gabrielle, highlighted the need to amend some legislation to assist recovery and improve resilience for areas that have been impacted.

The Severe Weather Emergency Legislation Act 2023 is the government’s response to legislation that can be amended to improve emergency response and reduce regulation. Having come into force on 21 March, the Act amends these four statutes:

  • Civil Defence Emergency Management Act 2002 (CDEM)
  • Resource Management Act 1991 (RMA)
  • Food Act 2014 (FA) and the Food Regulations 2015 (FR), and
  • Local Government Act 2022 (LGA).

 

Civil Defence Emergency Management Act 2002

Amendments to the CDEM address issues relating to concurrent declarations of states of emergency and notices of transition periods, and how resources dedicated to emergency response are used.

Group recovery managers appointed under the CDEM are responsible for coordinating the recovery activity within the region they are appointed. The Act clarifies that they must not use their powers, in respect of resources, for the benefit of a current emergency response if it is contrary to the priorities of an ongoing transition period in the region.

Resource Management Act 1991

Changes to the RMA slightly reduce the level of red tape following significant weather events. These changes lower the level of notice required by an authority to enter land in response to an emergency, and increase the ability for owners or occupiers of land to conduct emergency work and preventative remedial actions. Cyclones Hale and Gabrielle, as well as the heavy rainfall in Northland, Auckland, Waikato and the Bay of Plenty, are listed as ‘severe weather events’ with areas impacted by these events being ‘affected areas.’

Formerly a local authority or consent authority entering any place to take an action to remove the cause of, or mitigate any actual or likely adverse effect, of an emergency, had to give notice to the occupier. This has now been modified so that the authority only needs to display a prominent notice on the land and, as soon as practicable, a notice containing the same details is to be served on the ratepayer.

Under the old legislation, the notice required a person who had undertaken emergency works, or preventive or remedial action, to give notice of that activity within seven days and apply for any appropriate resource consents within 20 working days (if the activity contravened sections 9, 12, 13, 14 and 15 of the RMA). These times are now extended to 100 working days and 160 working days respectively. The same extension has been applied where emergency work is undertaken under the CDEM via section 330C.These extensions will revert back to the previous timeframes on 1 April 2025.

Immediate preventive or remedial measures to avoid, remedy or mitigate loss, injury, detriment or damage caused by a severe weather event undertaken by an owner or occupier of rural land is now a permitted activity under the RMA.

However, any activity classified as a prohibited activity in a relevant plan, any applicable regulations or national environmental standards will not be a permitted activity. Written notice must be provided to the relevant consent authority within 60 working days after starting the activity and, if the requisite notice is not given, the permitted activity status is revoked from the date on which the notice period ends. This will end on 1 October 2023 and the previously listed activities will no longer be permitted by default.

These sections aim to provide short-term relief for rural owners and occupiers to begin remedial work after the recent severe weather events without having the requisite resource consent as long as they are not listed as prohibited activities elsewhere.

Food Act 2014 and the Food Regulations 2015

Under the FA and FR, a food business is a business, activity, or undertaking that trades in food, whether in whole or in part. The FA and FR apply to food for sale as well as food-related accessories.

The Act acknowledges that compliance with the FA and FR registration and verification requirements may not have been possible for some food business owners during recent severe weather events in Northland, Auckland, Waikato, Bay of Plenty, Gisborne and Hawke’s Bay and the districts of Tararua, Masterton, Carterton and South Wairarapa (collectively referred to as ‘affected areas’).

If a food business in an affected area had their registration expire, or their registration is due to expire, between 8 January and 16 May 2023, they are provided with an extension for registration until 16 May 2023. A food business owner may continue to operate beyond this period provided they have paid the required fee for renewal of their registration.

Under the amended FR, food business owners in an affected area that were due to comply with regulations 87(1), 88(1) or 90 between 8 January 2023 and 16 May 2023 and regulations 91(1), 92(1), 93(1) or 94 between 8 January 2023 and 16 August 2023 are now exempt from doing so. However, if an operator of a food business benefits from an exemption they must resume compliance when they are next required to so in accordance with the FR.

Local Government Act 2002

Local authorities may amend existing long-term plans (being plans for the period 1 July 2021 to 30 June 2024) to include matters relating to water services so that they may respond to the damage that has been caused to water infrastructure as a result of Cyclone Gabrielle.

Local authorities and Civil Defence Emergency Management Groups now may also meet by audio or audiovisual link.

 

There is a great deal to digest with these changes; if you have any queries or need some help, please don’t hesitate to contact us.

 

DISCLAIMER: All the information published in Rural 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 Rural 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

Postscript

Commercial, First Job, News, Your Own Business
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Minimum wage increased on 1 April 2023

The adult minimum wage increased to $22.70/hour on 1 April 2023.

 

This is a significant increase, up from $21.20, and aligns with the 7.2% rate of CPI inflation in the year to 31 December 2022.

 

Also increased on 1 April were the training and starting-out minimum wage rates that are increased to $18.16/hour; this is 80% of the adult minimum wage.

 

For an employee who works 40 hours/week, the minimum wage rise to $22.70/hour means they earn an additional $60 each week before tax.

 

The government says it will review the minimum wage rate later this year.

 

Renew your employees’ pay rates

If you haven’t done so already, you should review your employees’ pay rates to ensure you are compliant with the new minimum wages. For employees on a wage this is a straightforward process as you only need to ensure that their wages are at least $22.70/hour. This is not the case for all employees, however, as it includes those on a salary whose current pay rates may be sufficient when they work overtime.

 

During busy times, salaried employees often work hours over and above their regular employment agreement hours. You should check the pay of these employees every pay period to ensure their pay divided by the actual hours they worked meets minimum wage requirements. If not, your employee’s pay must be topped up to at least the minimum wage, regardless of whether any term in their employment agreement says otherwise.

 

Failing to keep accurate time records could lead to a penalty under the Employment Relations Act 2000 or Holidays Act 2003.

 

You should also take the opportunity to ensure your time recording systems are accurate.

 

 

Improving the sustainability of your supply chain

All businesses in New Zealand should be working towards making their supply chain more sustainable – we all have a responsibility to help save the planet.

 

The Ministry of Business, Innovation & Employment states that about 70% of your business’s sustainability impact comes from your supply chain – so this is a good place to start.

 

Launched in February 2023, Docket provides a free (and short) online assessment, and practical tools and guides for you to see how well your business is caring for the environment and your team. Docket was created by the Sustainable Business Network in partnership with the government and the private sector.

 

To find out more, go here: https://sustainable.org.nz/docket/

 

 

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

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