Newsletter Spring 2020 2020-10-12T12:58:36+00:00

In this issue:

  • ARL News

  • Changes to the Residential Tenancies Act and terminating a tenancy

  • Contracting Out and Relationship Property Agreements. What’s the difference?

  • Key points of the Consumers Guarantees Act 1993

  • Paper Roads explained

ARL News

In need of Mediation Services? — Contact Ben Sheehan, Partner, ARL Lawyers

Ben Sheehan ARL Lawyers Hutt Valley Wellington NZ

Ben Sheehan, Partner at ARL Lawyers, is an associate member of the Arbitrators’ and Mediators’ Institute of New Zealand. With already extensive experience in civil, leaky home and employment mediations as an advocate, Ben has recently added a Graduate Diploma in Business Studies with a major in Dispute Resolution to his qualifications.

Ben is now available to act as a mediator to assist parties resolve their dispute.

Mediation is appropriate where both parties are looking to minimise their legal costs, save time and hopefully leave the mediation with their relationships intact. Ben can assist you with this process as a mediator.

As a Partner in a thriving law practice, acting as a mediator is just one more service that Ben offers.

Please contact Ben Sheehan at ARL Lawyers to discuss all your mediation needs.

Welcome to the team

The partners and staff are delighted to welcome Gabriella Ranford as a Legal Executive on the Property team.

Residential Tenancies Amendment Bill and terminating a tenancy

The recent passing of the Residential Tenancies Amendment Bill 2020 (“the Bill”) has made broad changes to the Residential Tenancies Act 1986 (“the RTA”). Two changes took effect on 11 August 2020, while most other changes will take effect from 11 February 2021 with the final changes taking effect from 11 August 2021 (however these final changes can take effect earlier if the Government agrees).

One of the reforms to the RTA taking effect from 11 February 2021 relates to the tenancy agreement and how it may be ended. There are two different types of tenancy agreements a tenant can enter into, fixed-term or periodic:

  • A fixed-term tenancy agreement is where the landlord and tenant agree on a period of time with an end date.
  • A periodic tenancy agreement is on-going, until either the landlord or tenants decide to end the agreement.

Prior to the reforms, to end a periodic tenancy, tenants had to give landlords at least 21 days’ notice as to when they will end the tenancy. Landlords had to give 90 days’ notice to the tenants, without having to give any reason or explanation as to why they were ending the tenancy.

Under the Bill, and effective from 11 February 2021, a landlord can no longer end a tenancy without giving a valid reason. The specified reasons by which a periodic tenancy can be ended by the landlord are given in the RTA. A few of these reasons are as follows:

  • The landlord intends to carry out extensive renovations at the property and it would be impractical for the tenant to live there during that process.
  • The landlord is putting the property on the market or has entered into an unconditional sale that requires vacant possession.
  • The landlord can apply to the Tenancy Tribunal to end a periodic tenancy if they have issued a tenant three notices for separate anti-social acts in a 90-day period.
  • The landlord can also apply to the Tenancy Tribunal to end a periodic tenancy if they gave notice that a tenant was at least five working days late with their rent payment on three separate occasions within a 90-day period.

The timeframes for giving notice have also increased to either 63 days or 90 days (depending on the specified reason).

A tenant will now be required to give 28 days’ notice to end a periodic tenancy.

The Bill also changes what happens when a fixed-term tenancy agreement comes to an end. Under the new rules, and effective from 11 February 2021, a fixed-term agreement will convert into a periodic tenancy after the end date unless:

  • A landlord gives notice using the reasons listed in the RTA for periodic tenancies.
  • A tenant gives notice for any reason at least 28 days before the end of the tenancy.
  • The parties agree otherwise e.g. to renew the fixed term or to end the tenancy.

 For further advice or assistance, please contact Heather Smith or Luke Havler.

The difference between Contracting Out and Relationship Property Agreements

The primary and distinctive difference between contracting out and relationship property agreements relates to the status of a relationship between two parties. The definition and status of a relationship as a marriage, de-facto relationship or civil union, under the Property (Relationships) Act 1976 (“the Act”) is important in assessing a contracting out agreement (“COA”) or relationship property agreement’s (“RPA”) influence.

Essentially, a COA commonly known as a ”pre-nup”, is often (but not always) entered into at the start of a relationship, prior to the relationship being defined under the Act as marriage, de-facto relationship or civil union and before the couple is subject to greater legal requirements around relationship property division. Couples enter into the COA to define their separate property and outline what would happen to that property if the couple decided to separate in the future.

On the other hand, an RPA, commonly known as a separation agreement, is entered into once a relationship has ended and the parties wish to divide their assets.

Contracting Out Agreement

A COA is used to contract out of the general relationship property division principles under the Act; with those principles providing for an equal 50/50 split of the relationship property between the parties. It gives couples the autonomy to decide how to split their assets if the relationship ends. Even, if in the eyes of the law such a split may not be deemed to be ‘equal’, the couple can subsequently waive those rights under a COA.

A COA is often seen in the case where one party enters the relationship holding significantly greater assets/wealth earned as their separate property or by an inheritance, which they wish to protect and keep separate in the event of separation. The COA is essentially a type of ‘insurance policy’ for either party to protect their assets or inheritance, despite every intention for the relationship to progress.

A COA is often recommended to couples who are purchasing a home together and one party has contributed a substantial amount more than the other party. This means that if the parties separated in the future, the party who made a larger contribution towards the property purchase can protect that contribution.

COA’s can be binding and important documents to review with your solicitor, hence Part 6 of the Act requires that your signature be witnessed by a solicitor who has certified that they have explained the contents and implications of the COA to you before signing. The court can declare a COA void if they view the COA lacks the fundamental principles of independent legal advice, disclosure or there is evidence of some kind of undue influence from one party to the other.

Relationship Property Agreement (RPA)

In the case of a relationship separation, the Act establishes principles which govern the split of those assets, as mentioned above. When couples separate from each other they may wish to have some autonomy and choice in how the relationship property is split. An RPA (also known as a separation agreement) allows the parties to do this. Similar to a COA, the couple is able to contract out of the Act’s general principles of equal division and negotiate the distribution of assets.

Commonly, parties wish to enter into an RPA to define specific separate property, i.e. businesses, trusts, houses and/or shares/investments. Sometimes the parties wish to customise distribution as the process of equally dividing an asset/liability can be labour intensive and disruptive or may cause unnecessary burdens for one party, for example, trying to sell an established business to split the equity.

It is important to note that if the parties wish to apply for a dissolution of marriage (a divorce) once they have been separated for two years they will need an RPA.

Similar to the COA, the requirements on both parties to receive full disclosure of all assets and legal advice on the implications of the RPA is vital. It is recommended that you contact a legal professional to discuss either agreement in detail.

For further advice or assistance, please contact Sophie Aitken.

Consumer Guarantees Act – Key points you should know

The purpose of the Consumer Guarantees Act 1993 (“the Act”), is to protect the interests of consumers while balancing the rights of businesses and consumers.

The Act provides consumers with certain guarantees when buying goods and services from a supplier together with the right to claim some form of compensation from suppliers and manufacturers if the goods and services fail to comply with guarantees in the Act.

The Act outlines certain guarantees that suppliers must provide to consumers when exchanging domestic goods (second-hand or new) and services. These guarantees include that (but are not limited to):

  • Where goods are to be delivered to a consumer by the supplier, the supplier guarantees that the goods will be received by the consumer within a reasonable time or at the time agreed between the parties.
  • The goods are of acceptable quality.

‘Acceptable quality’ provides that the goods:

  • –  Are safe and durable.
    –  Are fit for all purposes for which they are commonly used.   
    –  Match their advertised description.
    –  Are reasonably priced.
    –  Are free from minor defects.
    –  Are acceptable in appearance and finish.
  • For services, suppliers guarantee that the services provided are:

–  Completed within a reasonable time.
–  Reasonably priced (if the price is not already agreed).
–  Carried out with reasonable skill and care.
–  Fit for a particular purpose.

The Act allows consumers to seek repairs, refunds or replacements where the above guarantees are not followed by a supplier. However, the supplier or business has the right to decide which of the above remedies it will provide a consumer, which will largely depend on the circumstances of the claim.

It is important to note that the Act does not apply to goods normally bought for commercial business use; i.e. to trade, re-supply or use in the ordinary course of business. The Act covers goods and services used for domestic and personal purposes. Where businesses are purchasing domestic goods for use at the business premises, such as desks or telephones, for example, they can agree that the Act does not apply. However, to contract out of the Act for this purpose, the businesses must record this in writing. Businesses that sell consumer goods and services cannot contract out of the Act unless the above exemption applies.

The Act also does not apply to private transactions, so where you are involved in a private deal, it is important that thorough due diligence investigations are conducted before engaging the services or purchasing goods from a private seller.

If you own a business, it may be worthwhile reviewing the terms and conditions of trade. If you have any other concerns or queries about how the Act applies to you, please contact our ARL Lawyers’ Commercial Team.

Paper Roads explained

An unformed legal road, more commonly known as a “paper road”, is a parcel of land that is legally recognised as a road but has never been formed into a road. Many paper roads cannot be identified by physically looking at the land (it could just be a paddock) but paper roads will be evident on survey plans. Although paper roads have never been formed, the Court has found that paper roads have the same legal status as a formed road.

As paper roads hold the same status as formed roads, this means that the public has the right to drive their vehicles, walk on foot, etc. without having to ask for permission from a landowner. Paper roads are owned by the local Council, however, the Council has no responsibility to form, maintain or repair them.

It is important to remember that even though these roads are not formed at the moment, they can be developed in the future. With that said, it is also important to consider the use of the land to which a paper road flows through.

Paper roads were initially created in the late 19th century to make sure that in the future, blocks of land, especially land alongside waterways, would remain accessible for public use. However, many paper roads were created over landscapes, making it impossible to drive or even walk where the paper road is.

If you own property where a paper road runs through it, please remember that the public has a right to use that paper road. As it is difficult to find the exact location of many paper roads, landowners can fence or mark where the paper road is, in an attempt to minimise the impact on the surrounding land. Landowners are permitted to install an unlocked gate and anyone using the road must not damage the gate and must leave the gate as they have found it. Not following these simple rules could be considered an offence under the Trespass Act 1980. Livestock must not prevent the use of a paper road and landowners must not obstruct a paper road with vegetation, trees, scrubs, buildings etc.

Landowners can apply to Council for exemptions, which could ban access to the paper road. It is also possible to ask the Council to close the paper road, which would mean that the paper road no longer has the status of a road, and will not be public land. The closure and exemptions are at Council’s sole discretion.

The New Zealand Walking Access Commission, which was established by the Walking Access Act 2008, has created the Walking Access Mapping System, which informs the public of the location of public places including paper roads. This access map system can be found online at https://maps.walkingaccess.govt.nz/OurMaps/

If you have any concerns or queries regarding paper roads, please contact Ian Avison or Heather Smith.