Newsletter Spring 2019 2019-09-25T08:35:38+00:00

ARL News

We welcome Bethany Parlane and Rhiannon Hayes to the ARL team.


Bethany is a familiar face at ARL Lawyers. She started work at ARL Lawyers in 2007 as Office Junior working her way up to Trust Accountant. In 2011 Bethany left to have her first child but has since completed a Bachelor of Business Studies at Massey University and had another baby as well! We are delighted to have her back as our Practice Manager.



ARL Lawyers Charitable Trust purchases Defibrillator

Rebecca Dickie from ARL Lawyers donated a defibrillator to senior officer Wayne Nicholson and Dave Wyles-Jones at the Wainuiomata Volunteer Fire Brigade. Photo courtesy of Megan Connolly, Wainuiomata News.

ARL Lawyers Charitable Trust has donated a life-preserving defibrillator to the Wainuomata Volunteer Fire Brigade.

At a cost of $2500, it can be difficult for many community stations to fundraise enough to purchase one, so Firefighter Dave Wyles-Jones approached ARL Lawyers and asked if they would like to donate one and they were thrilled to be able to help.

Partner, Rebecca Dickie, said the ARL Lawyers Charitable Trust was set up five years ago to support the community in any way they could. “When Dave approached me, we jumped at the chance to help. We are delighted to be able to give back to the Wainuiomata Community and you never know when anyone is going to need assistance.”

The Volunteer Fire Brigade is raising funds to put together a complete emergency response kit and the defibrillator is part of this.

Free Seminars

Our highly successful Bank of Mum and Dad Seminar was held on the evening of 11th September. The seminar was oversubscribed so we are planning to repeat it in a few months’ time.  If you wish to pre-enrol in this seminar, please contact Janice at ARL on 04 5666 777 and we will make sure you are notified in advance of the date.



The Good the Bad and the Ugly of Retirement Villages. The next free seminar is on the 25th September and there are only a few places left, so register now. Contact ARL on 04 5666 777.


Anti-money laundering overview

The government has made changes to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act), to prevent money laundering and terrorism financing within various businesses and professions (including lawyers, accountants and real estate agents).

The Department of Internal Affairs (DIA) regulates and monitors compliance with the Act and is responsible for reporting any breaches. The Act aims to enhance the reputation of New Zealand businesses and maintain the view that New Zealand is a safe place to run a business.

The Act imposes preventative measures to ensure services provided by businesses are not used by criminals to hold and move funds anonymously.

Compliance with the Act for lawyers came into place on 1 July 2018. This involves lawyers completing customer due diligence (CDD) on clients before acting for them, sometimes even where they are long-standing clients, or the lawyer knows them personally. Very few matters we complete for our clients are exempt from the requirements of the Act.

The level of information required to complete the CDD will vary depending on the work being completed. As a minimum, we are required to obtain and hold for each client involved evidence of their full legal name, date of birth and address.

If you have instructed us to act for you since 1 July 2018, it is likely you were asked to provide this information at the commencement of our work for you.

Depending on why you have instructed us to act for you, further information may be required. For example, if we are paying funds to you from our trust account, we must also confirm with you the bank account number that the funds are being paid to. This usually involves obtaining a bank deposit slip, bank statement or online screenshot showing the account number and your name. Alternatively, where we receive funds into our trust account, particularly from overseas accounts, we may require verification of the source of the funds. This is particularly important in property transactions as the DIA have identified overseas money being laundered in this manner.

This information is required for individuals, and for trusts, companies and partnerships. So, if we are acting for your family trust for example, we will require proof of address and ID for each trustee. In the case of a company, we will require the same information for all directors and shareholders.

You will find that if you require a real estate agent, lawyer, and your bank for a single transaction, all three entities will ask for the same information (where they do not have the information already). If you can provide the required information to the parties that require it as soon as possible, this will ensure your matter progresses smoothly and may result in reduced CDD compliance fees.

What to know when building a house with a building company

Building a house can be a stressful, expensive and intimidating prospect for both new and experienced homeowners. It is crucial to ensure you are aware of your rights and obligations, and the rights and obligations of the builder too.

Prior to hiring a builder, you should complete your own due diligence on:

  • the builder
  • your financial position
  • the requirements of your lender during the build (if any)
  • what consents are required and when they should be applied for
  • whether the building quote encompasses all aspects of the build (consents, labour, materials, mark-up, subcontractors, architects’ input, changes to design, final designs etc.)
  • the time intended to complete the build

If you can be thorough with your due diligence before entering into a building contract and starting the build, it can help to reduce costs, assist the builders and ensure that no unnecessary delays or costs are incurred.

If you are using a builder, and the cost of the build is expected to be over $30,000 then the builder is required to provide you with a building contract. There are four groups of documents your builder needs to provide you with:

  1. Written building contract to be signed and dated before the work is carried out
  2. Ministry of Business Innovation and Enterprise (MBIE) consumer protection checklist
  3. MBIE disclosure document
  4. Copies of the various documents to be given to you at the end of the job (insurance policies, guarantees, warranties, maintenance requirements)

The website has a standard checklist for you to review, which lists all the clauses you should expect to see in your own contract, this is subject to the type of role played by the builder.

Your builder should advise you to review the documents before signing and that you should take the documents to a legal professional to review. Given the size of the documents and language that can be used, some of the terms and conditions can be hard to grasp if it is your first time. Getting the documents reviewed by an expert who can explain the contract to you and advise whether the contract terms are beneficial/detrimental to your intentions is an important step to take before committing your money to a build.

Issues that arise in a building dispute are commonly to do with the overall cost, miscommunication about variation costs, quality of the finish and what responsibilities each party had during the build. These issues are often a result of poorly drafted contracts that lack key details and the necessary clauses. Taking your time to understand and amend (if needed) any documents required for the build will go a long way to avoid such issues.

Contracts by their nature are always more difficult to change after they have been signed. We recommend you review this with us so we can raise any ‘red flags’ before it is signed.

For advice and assistance, contact Rebecca Dickie or Jason Taylor


Sole Trader vs. Limited Liability Company – liability compared

A sole trader is a common ownership structure that can be used to operate a small business. The main operator of the business may be one person supported by a family member such as a spouse.

Operating a business may be risky if the right asset protection and insurance is not in place to support the sole operator. The extent of their liability is that they are personally liable for any business debt or loss, including taxes. For debt owing to a creditor, a claim can be made against the personal assets of the sole trader, including funds in bank accounts, and the personal family home. Liability on behalf of the sole trader will end when the sole trader has passed away unless a Will provides for the business to carry on.

Should the sole trader cease to operate their business, then there is a statute of limitation of between 6 to 15 years for creditors to make a personal claim. Liability after this time may not apply.

When borrowing funds there may be a linked personal guarantee from the sole trader. When the debt is repaid to the bank, it will remain in place unless the lending organisation agrees in writing for its release. Liability can continue onto the sole trader’s executors and assignors under their Will.

A limited liability company is seen to be a separate legal entity from the shareholders of the company, who are its owners.

Liability on behalf of the shareholders of the company is limited to the amount of the debt belonging to it in ratio to the shares held. If the shares haven’t yet been paid for in full, there is an element of exposure of liability on the unpaid amount. If the company goes into liquidation, assets are sold so creditors are paid back first and then shareholders have a right to a share in the funds raised.

As liability can be dependent upon many things, directors can still be held personally liable for the company debt if they trade while it is insolvent and if they have given personal guarantees.

It is important for directors and shareholders to remember to have personal guarantees released in writing when changing lending institutions or retiring from the company.

Personal liability on behalf of directors may also apply where the directors have not acted in the best interests of the company, and/or have failed to act in accordance with the Companies Act.

If the company is acting in the capacity of an independent trustee of a family trust, liability can be disclosed not to be personal and unlimited. It can be limited to an amount equal to the value of the assets of the trust that are in the hands of that trustee company available to meet the trustee company’s liability from time to time. The relevant time for the purposes of assessing the value of the assets of the trust will be the time of enforcement of any judgment or order against the trust.

It is important when entering a business that you receive proper advice regarding the ownership structure and to consider how much risk and liability you are willing to accept when deciding to become a sole trader, director and or shareholder of a limited liability company.

For advice and assistance, contact Paul Logan or Nicki Hopkinson.


How many directors need to sign?

Signing documents that bind a company to obligations and potential liability is a key aspect of being a company director. It is part of the director’s role in guiding and running the company.

While shareholders are required to ratify major transactions and key decisions, on a day to day basis the directors are in control. They can delegate duties to CEOs and managers but ultimately, they have responsibility for directing and overseeing what the company employees do.

Directors sign key documents at the board level, following the constitution of the company. This sets out how many directors are required to sign to bind the company. The mechanics are that if two sign there does not have to be a witness to that signing. Where only one signs, there must be a witness.

Major document signing should be done following a written directors’ resolution relating to that matter.

Usually two directors sign once the resolution is in place. This protects the directors and the company. They have each other’s backs and a clear paper trail of the document signing process.

Authorised signatories may be able to sign some documents either alongside one director or in their place. In these instances, delegation protocols need to be in the relevant background paperwork.