The partners and staff at ARL Lawyers thank you for your business. We know the last couple of weeks have been a strain on everybody, so we hope you are all doing okay.
We would like to wish you all a blessed and safe Christmas. Like most Kiwis, we are taking a short break over the festive season.
Our office closes at 5 pm Friday 23 December 2016 and reopens again on 4 January 2017
Come along to our retirement seminars and hear about the good, the bad and the ugly of retirement villages. This is a great opportunity to have all your questions answered and to get sound advice on what a licence to occupy actually means for you and your family. If you want the assurance that you are making an informed decision about your future, come and hear what we have to say. The seminars are FREE!
We run these seminars regularly over the year but places are limited. Call the office 04 5666 777 to book your place on the next seminar. Spaces fill up quickly.
ARL News – our Mums are back
On 4 January 2017, Sharee Cavanagh is back with us from parental leave. You can contact Sharee
on (+64 4) 576 1671 email: email@example.com
On 9 January Rebecca Dickie returns from parental leave. You can contact Rebecca on (+64 4) 576 1655 email: firstname.lastname@example.org
Best versus Reasonable Endeavours
Have you ever seen a contract or agreement including terms such as “best endeavours”, “reasonable endeavours” or “all reasonable endeavours”? What do these terms mean? What is a party expected to do under these terms?
These common terms are generally misunderstood. However, as a general rule, these terms are used to compel a person to take action to fulfil an obligation or condition that might be, to some extent, beyond that person’s immediate control.
However, as with any contractual obligation, the devil is in the detail and courts are often called upon to determine what the detail actually requires of the person under the obligation.
A best endeavours obligation is more onerous on a party than an obligation of “reasonable endeavours”. It obliges a party to take all available courses of action to fulfil the obligation that a prudent, determined and reasonable person might have taken.
The steps that must be taken will likely include spending money to fulfil the obligation. However, under current New Zealand common-law, that person would not be expected to spend more than a reasonable amount of money or put themselves in financial jeopardy.
An obligation to use “reasonable endeavours” is less onerous on a party than a “best endeavours “obligation. The “reasonable endeavours” obligation is typically defined by reference to an objective standard of what an ordinary competent and reasonable person might do in the same circumstances.
Under an obligation of “reasonable endeavours,” a person is able to balance their contractual obligations against their commercial operations in deciding which course of action to pursue. Accordingly, a party is not required to take any course of action that might prejudice the interests of that party.
However, if the clause that requires reasonable endeavours sets out specific steps, then the person having that obligation must take those steps regardless of costs.
All Reasonable Endeavours
The courts have grappled with the interpretation of an obligation of “all reasonable endeavours.” It has considered whether it is a middle ground between “reasonable endeavours” and “best endeavours”, or as recent court interpretation suggests, whether there is no real difference between “all reasonable endeavours” and “best endeavours”.
With that in mind, if a person is under an “all reasonable endeavours” obligation, it is expected they will not be obliged to take a course of action in order to fulfil that condition, if fulfilling that condition is beyond that party’s control and if the action may result in the sacrifice of their own financial interests.
However, if a party is under an “all reasonable endeavours” obligation to do something that is within its control, then that party is obliged to fulfil that condition and cannot choose what to do in light of its commercial interests. In the event that the term is extended to read “all reasonable but commercially prudent endeavours”, then the party concerned may consider its commercial interests in deciding how to fulfil the condition.
Clearing up confusion
Where these matters are left to the court for interpretation, the situation will always be fact specific. However, the use of these terms and what they oblige a party to do or not do is always an issue. Caution should always be observed when using these terms. The likelihood of requiring court interpretation is ever-present.
To ensure that the interpretation of your contract or agreement does not end up in court, it is advisable to stipulate specific steps a party must take in order to fulfil a condition. This can be bolstered by setting a timeframe in which the condition should be satisfied or endured. Outlining possible penalties, remedies or responses if the condition is not fulfilled could add some clarity around what is expected by each party.
Please note that there are a number of cases before the courts reconsidering the position of “best endeavours”, “reasonable endeavours”, and “all reasonable endeavours” and as such the current interpretation of these terms may be subject to change.
Building a Boundary Fence
The Fencing Act 1978 prescribes the steps that a person must take before building a fence on or near the boundary with a neighbour. It is a three step process:
1.Send a fencing notice
The neighbour wishing to build, replace or repair a boundary fence must notify the other neighbour(s) about the type of fence and materials to be used, the cost of the fence and the details of when the work will start and who will do it. The notice must also confirm that the neighbour(s) may object and make a proposal of their own or may refuse to accept liability (if good reasons exist to do so) for the cost of the fence.
The neighbour(s) to whom the fencing notice is given may object to any element of the proposal and may provide a counter proposal.
3.Build a fence or negotiate
If there is no objection (either because the neighbour does not respond or accept the proposal) within 21 days of the date of the fencing notice, the process is complete and the fence may be constructed as per the fencing notice and the costs split 50/50. However, if there is an objection, the neighbours must come to an agreement and if they cannot do so, either party may refer the matter to a mediator, adjudicator, the Disputes Tribunal or the District court.
Strange and Wonderful Land Covenants
Land covenants are standard in residential developments. They are essentially the rules that the owners and occupiers of land within the subdivision/development must abide by. They keep the area and properties within that residential area up to the standard hoped for by the developer and the buyers of properties in that area.
Covenants are relatively harmless. They usually confirm the ordinary good neighbour rules that we all try and live by. However, strange and wonderful rules are adopted from time to time. Here are some examples:
- Rules about permitted breeds of dogs and cats and a cap on the number of dogs and cats
- Other general animal restrictions (e.g. no roosters and no more than two chickens)
- Rules about where to place trampolines and other children’s toys (e.g. less than 4 metres from a roof)
- Rules to stop certain washing lines and sheds being used including restricting the colour and type
- Rules that stop residents hanging their washing within sight of the road
- Restrictions as to the planting of certain trees or hedges
- Imposition to maintain gardens and use certain contractors for servicing maintenance of gardens with neighbours/development
- Restrictions on parking including the number of vehicles, placement and colour / type of vehicle
- Rules about where to park boats and caravans (and in some instances a ban on parking these vehicles).