Newsletter Autumn 2018 2018-08-29T10:54:34+00:00

ARL News

ARL Lawyers Academic Excellence Scholarship

James Hazeldine, of Hutt Valley High School, is the recipient of the 2017 ARL Lawyers Academic Excellence Scholarship. James excelled in a wide range of academic subjects and was actively involved in music, debating, and represented Hutt Valley High School in athletics, cricket and football. James will study Law at Victoria University this year and is delighted to receive the scholarship to assist with his fees. Congratulations James, from everyone at ARL!

Alternative Dispute Resolution Series: Arbitration – How can it assist you?

Alternative Dispute Resolution (ADR) methods are an alternative option to going directly to court. The primary objective of arbitration is to provide a flexible and efficient means of resolving disputes quickly, cost-effectively and confidentially without necessarily adhering to the formalised and technical procedures of court processes. This is our second article in our ADR article series and focuses on arbitration. The arbitration process is governed by the Arbitration Act 1996 and the Arbitration Amendment Act 2007.

Arbitration is a formal process where two or more parties agree to submit all or selected disputes between them to an independent party called an arbitrator who can provide a binding decision. The arbitrator is selected by the parties, or by an agreed nominating body, because of their experience, skill and expertise in matters closely related to the subject matter of the dispute.

During the arbitration, the parties will present their evidence and provide their arguments to the arbitrator who makes a decision, called an award, which is binding on the parties and is enforceable as a judgment of the Court.

Advantages and disadvantages of arbitration

The advantages of arbitration are:

  1. The parties have control over the selection of the arbitrator
  2. If a voluntary resolution between the parties is unlikely, arbitration will resolve the dispute without the need of using the court system, although the parties may not agree with the outcome
  3. The process of arbitration is usually less costly than litigation and is commonly more time effective
  4. Arbitration hearings are private and the results are not a matter of public record.

The disadvantages of arbitration are:

  1. In some circumstances, arbitration can be a formal and lengthy process depending on the complexity of the matter and quantity of information to review
  2. Although you present your evidence to the arbitrator, you are relying on the arbitrator to interpret the evidence rather than a judge or jury
  3. The parties have no control over the outcome of the arbitration
  4. Arbitration can be adversarial and does not aim to preserve important relationships.

Differences between Mediation and Arbitration

Mediation and arbitration are the most commonly used ADR methods. However, although each method is voluntary, they can produce significantly different results.

Mediation is a process where an independent mediator assists the parties to reach an agreement through the course of negotiations. Mediation allows the parties to control the terms of the agreement; these terms are not required to reflect the parties’ legal rights and entitlements. The mediation process may not result in an agreement, and the mediator has no power to recommend an agreement unless authorised to by the parties.
Arbitration can be used after mediation has failed or as an alternative to mediation.

Conclusion

There are clear advantages and disadvantages of engaging in arbitration. Despite this, the primary objective of arbitration is to be a fair, prompt and cost-effective process that addresses and resolves disputes in a manner that is proportionate to what is in dispute and the complexity of the issues involved. For further information on using ADR to resolve a dispute, contact Ben Sheehan.

An introduction to shareholders’ agreements – why are they important?

A shareholders’ agreement (Agreement) records the arrangements between the shareholders and directors of a company regarding its ownership, governance and management. It seeks to remove the ambiguity amongst the shareholders and directors and provides direction to manage unforeseen circumstances as well as providing guidance for the day-to-day operation of a company.

Companies are not required to implement an Agreement by law. However, implementing an Agreement is recommended. It is designed to address areas regarding governance and control of business activities, whether external or internal, which a company constitution or the Companies Act 1993 may not specifically address. For example, the Companies Act 1993 may not provide specific guidance regarding the process for shareholders exiting a company. This is where an Agreement can be used by shareholders to outline the process and minimise any potential disputes and associated costs between exiting and continuing shareholders.

Generally, an Agreement sets out matters including, but not limited to:

  • How initial and continued shareholder funding is made and minimising shareholders exposure to capital risk
  • The procedure for board meetings
  • How the profits are distributed to shareholders
  • The appointment and removal of directors and shareholders
  • The transfer or sale of shares, i.e. offering shares to existing shareholders, how shares are valued and the number of shares permitted to be transferred in order to safeguard tax benefits
  • Shares which are issued to employees of the company, and how these are transferred when employment ends
  • Shareholder voting rights and the number of shares in the company
  • What decisions may be made by directors, what decisions require shareholder approval, and if shareholder approval is required, whether this is by majority, special resolution or unanimity
  • How disputes are resolved

An Agreement provides a number of benefits for different types of companies. Companies with more than one shareholder are encouraged to at least consider the advantages of an Agreement. Companies with only one shareholder may consider that while there is only one shareholder, it is not necessary to have an Agreement.

Agreements are especially useful when there is no majority shareholding, commonly seen in smaller companies, as there is an increased risk of shareholder disagreements. Therefore, to ensure the maintenance of functional shareholder relationships, it is equally important for smaller as well as larger companies to have an Agreement.

The Agreement can include specific and sensitive details (unlike a company constitution which is available to the public) regarding the rights and obligations of the parties involved in the company and/or the rights attached to shares. This protects the interests of the shareholders and directors. An Agreement may provide that it can only be varied by unanimous agreement amongst the shareholders and accordingly, minority shareholders are further protected.

A constitution can only be implemented once a company is incorporated. However, an Agreement may be signed beforehand. This can be beneficial where a company must meet specific deadlines for a transaction from the outset of its formation.

An Agreement can provide customised administration and protection for shareholders and directors, which a constitution may not have the capacity to provide. It can be easy to delay the signing of an Agreement when a new business relationship is formed. However, it is during this initial stage of forming a company, that an Agreement should be put in place. This ensures that all parties involved understand the governance and ownership of the company from the outset. An Agreement aims to reduce additional costs, time and stress resulting from potential shareholder disputes and accordingly, it is an invaluable document which all companies should consider, if not implement.

If you are looking at incorporating a company or need assistance with your shareholders’ agreement or company constitution, please contact Paul Logan or Nicki Hopkinson.

Proposed changes to the Employment Relations Act 2000 – What you need to be aware of

The recently elected Labour-led Government has released its proposed changes to the Employment Relations Act 2000 (ERA) which are predicted to affect New Zealand’s employment landscape significantly. The proposed changes are recorded as:

1. The amendment of the existing 90-day trial period (trial period)
2. The doubling of Labour Inspectors (Inspectors)
3. Minimum wage increase from $15.75 to $20.00 by 2021
4. Introduction of Fair Pay Agreements
5. Extension of paid parental leave
6. Changes to redundancy provisions
7. The abolition of youth rates

Removal of the 90-day trial period

The Government is set to change the ERA to allow employees to bring a claim against employers where they feel they have been unfairly dismissed during their trial period. These claims will be heard through short hearings without lawyers. The remedies available to workers may be reinstatement or damages up to a capped amount.

More information regarding the trial period reform will be released in the coming months, but in the meantime, it is recommended that employers become familiar with what constitutes unfair dismissal under the current employment legislation.

Doubling of Labour Inspectors

Inspectors monitor and enforce compliance with employment standards. They use investigations and audit programmes to find and investigate potential breaches of employment standards and to enforce compliance.
Currently, only 60 inspectors are inspecting the entire country. The Government proposes to increase the number of inspectors to 110.

Minimum wage increase

The minimum wage is set to increase from $15.75 to $16.50 per hour by 1 April 2018 with the goal to raise a minimum wage gradually to $20.00 per hour by 2021.

Fair Pay Agreements

The Government is proposing it develop and introduce a system of collective bargaining for each industry. This system is intended to allow unions and employers, with the assistance of the Employment Relations Authority, to create Fair Pay Agreements that set minimum conditions, such as wages, allowances, weekend and night rates, hours of work and leave arrangements for workers across an industry, based on the employment standards that apply in that industry.

Paid Parental Leave

A commitment has been made to increase paid parental leave from 18 weeks to 26 weeks by 2020.

Changes to redundancy provisions

Consultation is to start on changing the minimum redundancy provision protection for workers. Recommendations such as the development of initiatives that smooth the transition of people made redundant into alternative jobs have been identified as the basis on which to change the provision.

Abolish youth rates

The Government has also proposed to remove youth pay rates. Youth pay rates are 80% of the adult minimum rates. For information on your obligations as an employer or rights as an employee, contact Ben Sheehan or Joshua Pietras.

 

In brief

Who Pays the Rates? – Selling a Property

Property rates are due throughout each respective council’s prescribed rating periods. Payment may be made annually, six monthly, four monthly, or three monthly.

When selling your property, you are required at settlement to pay the rates up to and including the settlement date. In practice, the vendor will pay the rates to the end of the current rating period and the purchaser’s share of the rates will be apportioned in the settlement statement and paid to the vendor by the purchaser – e.g. if the second instalment is from 1 October 2017 – 31 December 2017 and settlement is on 10 November 2017, the vendor will commonly pay the rates up until 31 December 2017. As the purchaser will have possession of the property from the settlement date onwards, they are required to reimburse the vendor for the rates from 11 November 2017 – 31 December 2017.

Inheritance – Is it separate property?

Separate property is all property of a spouse/partner that is not required to be equally shared under the Property (Relationships) Act 1976 (Act) when a relationship comes to an end. Generally, inheritance is separate property. However, if separate property is intermingled with relationship property (property that must be divided between spouses/partners when the relationship ends), it may lose its status as separate property. An example is where inheritance money is used to pay the mortgage on a family home, or to buy a new home which the couple and/or their family live in together.

A contracting out agreement (Agreement) allows couples to determine for themselves the relationship and separate property, rather than relying on the principles of the Act.

Although inheritance may appear to be separate property, to be safe, we recommend seeking advice when you receive it so you can determine whether or not you need an Agreement to protect your inheritance moving forward. For further information on relationship property, separate property and contracting out agreements, contact Sarah Morrison or Nisha Dahya.