Month: March 2014

Ownership of a dwelling on multiply-owned Māori freehold land

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He Tīmatanga/Introduction

The matter of ownership of a dwelling built on multiply-owned Māori freehold land was recently raised again in the case of Herewini – Maungaroa 1 Sec 23K (Keterau) (2013) 85 Waiariki MB 141.  This case is a reminder to those who build on multiply-owned Māori freehold land that, once built, the dwelling, if affixed to the land, is considered to form part of the title to the land, belonging to all of the owners.

The Māori Land Court (“the Court”), however, has the ability to award the ownership of such a dwelling to the owner who built it.

Herewini – Maungaroa 1 Sec 23K (Keterau) (2013) 85 Waiariki MB 141

This case concerned a dispute over the ownership of a dwelling (in this case a converted skyline garage) on a Māori freehold land block, Maungaroa No. 1 Section 23K.

The applicants applied under s 18(1)(a) of Te Ture Whenua Māori Act 1993 (“the Act”) for an order granting them ownership of the dwelling.

The basis of their application was that they had built and occupied the dwelling since 1989, had paid all outgoings from 1993 and had obtained a loan in 2007 which they used to convert the garage into the four bedroom dwelling.

However, their right to possession of the dwelling was challenged by some of their whānau for the following reasons:

  • The house was a fixture and therefore owned by all owners;
  • Consent given by other owners was only for  a double garage;
  • The original intention of the dwelling was that it would be available for all whānau living away as a temporary home base;
  • It was not intended for one whānau to own or occupy the dwelling indefinitely;
  • The spiritual connection that all the whānau have for the whenua and dwelling should be maintained and not extinguished.  This was because the site where the dwelling is located is the site of the old whānau homestead.
Ko te Ture/Relevant Law

In its decision, the Court referred to the Māori Appellate Court decision in Tohu – Te Horo 2B2B2B (2007) 7 Whangārei Appellate Court MB 34 (7 APWH 34) where the Appellate Court discussed s 18(1)(a) of the Act stating:

“Where an owner of multiply owned land, … builds a house on the land, the house if affixed to the land, forms part of the title to the land and belongs to all the owners of the land according to their respective shares.  That is the legal position.  However the Court has, in many such cases, using equitable jurisdiction … awarded the property in the house in an owner who has erected the building, thus giving him or her rights to the house.”

Therefore, the Court is able to use its equitable jurisdiction to award ownership of a dwelling to an owner who erected it.  Where it grants such an order the Court noted that this appears to separate the house from the title to the land and treat it as a chattel.

The Court also noted that there is no ability to succeed to an order of this nature and that anyone who wishes to sustain a claim for the house needs to apply for another order.

Ko te Whakawā/Decision

Following that line of reasoning, the Court in the Herewini case awarded the applicants ownership of the dwelling.  Factors the Court considered in reaching this decision included:

  • The length of the applicants’ occupancy of the dwelling and the improvements they had made;
  • The significant work and investment made by the applicants in building and improving the dwelling;
  • The fact that the applicants had taken responsibility for payment of the rates;
  • The fact that the applicants were the ahi kaa on the land;
  • The fact that alternate sites were available on the block for other members of the whānau should they wish to build on the land, meaning that no one would irrevocably lose their bond with the land as a result of the Court’s decision.

It is noted however that, although there was a positive outcome in this case, there is always a risk that the Court will not grant ownership in this type of case.

Tono noho whenua/Occupation Orders

An alternative available to owners, either in this situation or considering building, is an occupation order issued by the Court.  Such an order grants people the right to occupy a house site on Māori freehold land. Occupation orders can be sought for an existing house, but preferably would be sought in advance.

The owner of a beneficial interest in Māori land or anyone entitled to succeed to a deceased owner may apply for an occupation order. The area of occupation sought must not be more than the proportion of shares the applicant owns, or will own upon succession, in the block.

The Court may set a period of time that the order is for, or specify that it will end on the occurrence of a defined event, such as the death of the occupier.

He Whakarāpopototanga/Summary

Given the potential ownership issues with dwellings built on multiply-owned Māori land, it is recommended that owners seek advice before proceeding to build to avoid any unwanted repercussions later, such as a challenge to ownership.

Alternatives such as occupation orders under the Act may be more appropriate for those considering building on multiply-owned land and provide applicants with some assurance, before proceeding to build, that their right to occupation will not later be challenged.

If you would like further information please contact Kylee Katipo on 07 958 7424.

Update on the Construction Contracts Amendment Bill

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Introduction

We were expecting the proposed changes to the Construction Contracts Act 2002 (via the Construction Contracts Amendment Bill (Bill)) to come into force on 1 November 2013. However, the Commerce Committee (Committee) only released its report on the Bill on 11 December 2013.  The result is that the timeframe for the changes has now been pushed out, for the most part, to 1 November 2014.

The purpose of this article is to summarise the key points made by the Committee in its report.

Recap on the proposed changes to the Act

The main proposed changes to the Act are:

  • Removing most of the distinctions between the treatment of residential and commercial construction contracts;
  • Extending the scope of the Act to include contracts for design, engineering and quantity surveying work (by amending the definition of construction work);
  • Allowing for enforcement of adjudication determinations about rights and obligations of parties to a construction contract; and
  • Making the process of enforcement of adjudication determinations more efficient.
Committee report

The Bill was referred to the Committee on 11 June 2013, with public submissions closing on 25 July 2013. The Committee received 31 submissions from interested groups and individuals and heard 22 of those submissions.

Although the Committee does not appear to disagree with any of the above proposed amendments, it has recommended some changes to the relevant clauses in the Bill as well as additional recommendations – some positive, others not so much.  This includes recommended changes to the adjudication process and a recommendation that will expand the scope of payment claims.

Definition of construction work

Significantly, the Committee has recommended that the definition of construction work under the Act is further extended to include “operations that are critical for the completion of, or preparatory to, the scope of design, engineering, and quantity surveying work”.  This is because, in the Committee’s view, these “related services” directly affect the quality of building work, and it would benefit consumers if they were covered by the Act.

This may have been inspired by section 6(1)(f) of the Act, which includes in the current definition of construction work “any operation that forms an integral part of, or is preparatory to or is for rendering complete” particular categories of “construction work”.

Adjudication process

In its report, the Committee has acknowledged that the tight timeframes set out in the Act in regard to the adjudication process could create opportunities for “ambush claims”.  This is because, at the moment, claimants can set adjudication in motion straight away, and the respondent is required to reply within five working days of receiving an adjudication claim (unless an extension is agreed to between the parties or granted by the adjudicator).  The Committee noted that this is particularly an issue for residential home owners and smaller contractors as they are not likely to be familiar with the adjudication provisions of the Act.

It appears that the Committee has recommended changing the timeframe for selecting an adjudicator to two to five working days after the notice of adjudication has been referred to the adjudicator (where the parties have agreed on two different adjudicators but they are unable or unwilling to act).  The reason for this is stated in the report as being “to limit the ability of a claimant to rush an adjudication for tactical reasons”.  However, this is in fact a reduction in the timeframe that is currently prescribed under the Act of five working days, which would have the opposite effect.

The Committee has also recommended adding a new provision so that an adjudicator is required to allow a respondent additional time if it is believed that the claim has been served with “undue haste” and the respondent has “insufficient time” to prepare a response.  This is a positive change for respondents of course, however, the fact that a claimant only has five working days from service of the notice of adjudication to file their adjudication claim, means many claimants pre-prepare their claims.  On that basis claims are quite often served with “haste”, therefore it would seem that an adjudicator would be bound by this provision more often than not.

Content of payment claims

The Committee has also recommended changing the definition of“claimed amount”under the Act to include liquidated damages, breaches of implied warranties under the Building Act 2004, and construction work already carried out.  This amendment would clarify that damages could be claimed in a payment claim if they were specifically agreed in a contract or implied by law, which is a matter that has previously been the subject of uncertainty.  This will therefore be a positive and welcome change to the Act.

Conclusion

The Committee has included some positive recommendations in its report, which will be welcomed by the industry.  On the other hand, there are some recommended changes that do not make a lot of sense.  It will therefore be interesting to see whether or not those recommendations are in fact adopted in the much anticipated Construction Contracts Amendment Act.  The second reading of the Bill in Parliament, which is the next step, may shed some light on that.  We will continue to ‘watch this space’ and report back on any interesting developments.

If you would like further information please contact Daniel Shore on 07 958 7477.

The Disputes Tribunal process

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This article discusses lodging or defending a claim in the Disputes Tribunal, including tips on what to consider when preparing evidence for a hearing and some comments on what to expect from the hearing itself.

The Disputes Tribunal

The Tribunal is a lay people’s forum for hearing and determining disputes.  The focus of the Tribunal is on practical dispute resolution and not technical legal analysis.  The Tribunal aims to resolve claims in an informal, inexpensive and speedy manner.  In most Tribunal hearings, claimants or defendants are not allowed to make use of advocates.  In these circumstances the responsibility of preparing for a hearing will fall on the parties themselves.

If you have a claim in contract, quasi contract (a contract that is implied or created because of the circumstances) or tort (negligence, injury or damage to property) then it is likely that the claim can be heard and determined by the Tribunal.  However, the upper limit of any claim which can be heard by the Tribunal is $15,000 (or $20,000 by agreement between the parties).

Lodging a claim

In order to lodge a claim in the Tribunal, a claim form needs to be completed and filed and a filing fee paid (the amount of which depends on the amount of your claim).  The claim form is available on the Ministry of Justice website (www.justice.govt.nz).

To avoid delays, it is important that your claim is correctly lodged.  This may seem obvious but mistakes are often made.  Common mistakes to avoid include:

  • Failing to correctly name the party that you are bringing the claim against.  For example, failing to recognise the distinction between a company and an individual.  In a breach of contract situation a key question to ask is who is my contract with?
  • Failing to name an interested party.  Parties who are affected by the outcome of a Tribunal hearing need to be named when a claim is lodged.
  • Failing to include important details in your claim.  For example, if you do not include an important element of your claim in the claim form, it may be determined at the hearing that the element you failed to include is outside the jurisdiction of the Tribunal and therefore unable to be resolved.
Defending a claim

When a claim is lodged against you, a notice will be sent informing you of what the claim is about, and when it will be heard.  Options to consider when a claim has been made against you are:

  • To try and settle the claim with the other party before the hearing.
  • To attend the hearing and defend the claim.
  • To lodge your own claim against the other party (a counterclaim).  If you lodge a counterclaim, both claims will typically be heard at the same time.  The above comments on lodging a claim apply equally to counterclaims.

The Tribunal information page contains comprehensive information that is useful for both applicants and defendants.  Again, this information can be accessed at (www.justice.govt.nz).

Preparing evidence

Proper preparation of the evidence in support of your claim or defence is extremely important to successfully bringing or defending a claim in the Tribunal.  Having accurate and relevant evidence will strengthen your case.  Consider the following when compiling your evidence:

  • Begin by creating a timeline of events relating to the claim.  This will provide you with a blueprint for your preparation.  Only include the events that are most relevant to the dispute.
  • Gather relevant evidence (for example, letters, emails, photos, invoices) to support each event.
  • Organise your evidence logically so that it can be easily accessed and referred to.  This could include using a folder and dividers, numbering the pages of your evidence and including an index.
  • It is very important to include evidence to support the dollar amount of what you are claiming (for example quotes, invoices, receipts or bank statements).  This is equally important if you are disputing the amount claimed against you by the other party.
  • Arrange for any witnesses who can support your claim or defence to be involved in the hearing (It is possible for a witness to give evidence over the phone if necessary).  It is important to note that a witness and a support person should not be the same person.  A witness will not be allowed to be in the room during the course of the hearing and will only be present when giving evidence.

Note: Make sure you provide copies of all the evidence you intend to present at the hearing to the other party before the hearing begins.

Pre-hearing considerations

After you have lodged a claim, or a claim has been lodged against you, a hearing will typically be scheduled within 6 weeks.  Useful pre-hearing considerations are:

  • Making sure you read the notice of hearing (checking the time, date and location of the hearing).  If you do not turn up, it is likely that the hearing will still proceed and an order can be made in your absence.
  • If the hearing date is not suitable, contact the Tribunal as soon as possible to ask if a new date can be allocated.  You are more likely to obtain a new date for the hearing if you have strong grounds for not being able to attend on the original date.
  • Organise a support person to attend the hearing to help you sort through your evidence or remind you of important points.
  • The Tribunal aims to achieve settlement between the parties during the hearing so consider the basis on which you would settle the claim by agreement with the other party and be prepared to negotiate.  With any Tribunal hearing there is a chance that the referee will not make an order in your favour therefore, depending on the circumstances, settlement may be the best option.  Throughout the hearing, consider the strengths or weaknesses of your position and how it may affect your decision to settle.
The hearing process

On average, hearings are around 45 minutes in length (although this can be shorter or longer depending on the complexity of the claim).

The hearing will begin with the referee outlining the procedure and rules for the hearing.  Both parties will then present their evidence during which the referee will ask questions about the evidence being presented.

Following this, any witnesses giving supporting evidence at the hearing for the claim or defence will be called into the room separately.  After a witness has presented his or her evidence, the other party will have the opportunity to ask the witness questions.  Helpful tips for questioning a witness are:

  • If possible, prepare your questions prior to the hearing.  Even if you add to or change them at the hearing, it is recommended that you have a list of questions in mind beforehand.
  • Avoid asking suggestive questions.  For example, “He was wearing a red hat wasn’t he?” is a suggestive or leading question because it suggests to the witness that the hat was red.  In contrast, a question like “What was the colour of the hat he was wearing?” is an open-ended question which prompts the witness to recall the answer from memory.

The referee will then explain to both parties the relevant law and issues that need to be determined to resolve the dispute.  If you do not understand the law or the issues that the referee outlines, bring this to the attention of the referee.

When the issues have been worked through and both parties have a better understanding of their position in the dispute, the referee will often ask whether the parties are willing to settle the dispute on their own terms.   When considering whether or not to settle, you should consider the strengths and weaknesses of your position and what you would accept to resolve the dispute.

At the conclusion of the hearing, the referee will not issue a decision but will instead take time to further consider the evidence that has been presented by both of the parties.  The order and the reasons for it will be sent to the parties approximately two weeks after the date of the hearing.

Summary

When lodging a claim with the Tribunal, attention to detail is paramount.  Ensure you have not made any errors and that you have included enough detail in the description of your claim.  When defending a claim, your options are to try and settle the claim before the hearing, defend the claim and/or bring a counterclaim against the applicant.

When preparing evidence, create a timeline of the events surrounding the claim, gather relevant evidence to support your interpretation of the events and organise your evidence well.  Also, consider whether your evidence will be strengthened by the involvement of a witness.

Before the hearing, determine whether you will need a support person to attend the hearing with you.  Also, consider your position on settlement as negotiations may occur during the hearing.  Remember that any decision to settle should also be informed by what you learn about your position as the hearing unfolds.

During the hearing, if the other party has brought a witness to give evidence, organise some basic questions to ask the witness beforehand.   Avoid asking suggestive questions.  Also, if you do not understand anything the referee has said or the issues they outline at the hearing make sure you let them know.

Final word

The Tribunal is a very accessible forum for the general public to use for resolving disputes.  However, not having a legal representative can leave many floundering as to how to best approach a Tribunal hearing.

If you would like further information please contact Daniel Shore on 07 958 7477.

Caveats: What, when, how and why?

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What is a caveat?

In general terms, a caveat is a notice that is lodged against the certificate of title for someone else’s land.  The person who registers a caveat is known as the “caveator”.

A caveat serves as a notice that the caveator claims an interest in the land subject to the caveat, even though the caveator may not be the legal owner of the land.  Lodging a caveat means that the owner of the land cannot transfer, mortgage or otherwise deal with the land without the caveator’s consent (unless the caveat is released or a Court orders otherwise).

It is important to remember that a caveat does not create an interest in land – it is simply notice that an interest is claimed by the caveator, which can be disputed by the land owner.

When and why would you register a caveat?

Only a person with a “caveatable interest” in land can lodge a caveat against it. What is a “caveatable interest” will depend on the circumstances, but some common examples are:

  • Interest of a purchaser who has an agreement to purchase land;
  • Interest of a person who has an option to purchase land;
  • Interest of a mortgagee/lender where there is an agreement to mortgage land;
  • Interest of a beneficiary who has an interest in land under a trust or estate;
  • Interest of a tenant who has a lease of land.

The most common situation we see as lawyers is where a purchaser has signed an agreement to purchase land and the settlement date is some time away.  In that case, the purchaser can lodge a caveat against the title to stop the owner from dealing with the land before the sale is completed.

Another common example is where a family member has loaned money secured by an agreement to mortgage, rather than a full registered mortgage.  In that case, the lender can lodge a caveat to ensure that there is notice on the title of the agreement to mortgage.

As mentioned above, the caveator must have a “caveatable interest” to lodge a caveat.  Some examples of when a caveat cannot be used are:

  • A lender who is owed money by a borrower cannot lodge a caveat  against land owned by the borrower (unless there is a mortgage, agreement to mortgage, or other charge in place);
  • A shareholder in a company cannot lodge a caveat against land that the company owns.

If a caveat has been lodged without reasonable cause, the caveator may be liable for loss and expenses caused to the land owner or any person who suffers loss resulting from the wrongful registration.

How is a caveat lodged?

If you have an interest in land that you believe can be protected by a caveat, you need to contact your lawyer to prepare an authority and instruction form. This form is the authority required to register an interest in land.

Your lawyer can sign this form on your behalf “as agent” and arrange for it to be lodged. This process can occur relatively quickly, provided you have the relevant information available for your lawyer.  Land registration fees will apply.

How can a caveat be removed?

The easiest way to remove a caveat is for the caveator to agree to withdraw the caveat. Similar to the lodgement process referred to above, the caveator simply needs to sign an authority and instruction form for the withdrawal of the caveat, which is then registered. Unlike lodging the caveat, the lawyer for the caveator cannot usually sign the authority and instruction form as agent for the withdrawal of the caveat – it must be signed personally by the caveator in most circumstances.

If a caveator does not agree to withdraw a caveat and the land owner believes it is wrongfully recorded, the landowner can:

  • Apply to the High Court application to have the caveat removed;
  • Apply to the Land Registrar to remove the caveat or have it lapse.

Where the land owner has applied for a caveat to lapse or be removed, it will be up to the caveator to prove that the caveat is supported by a caveatable interest and should remain lodged against the title to the land.

Conclusion

If you have an interest in land which you would like to protect, a caveat may be a suitable way to do so.  On the other hand, if you are a land owner who has had a caveat lodged against the title to your land, you have the option to apply for removal if you believe the caveat is wrongfully recorded on the title.

Talk to your lawyer for advice regarding your particular circumstances.

If you would like further information please contact Zane Mora.

Where there is a will – is there always a way?

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Introduction

In 2007, the new Wills Act (the Act) came into force.  The primary aim of the new Act was to give better effect to a will-maker’s intentions by simplifying the law, expressing it in plain language and modernising aspects of the law.

As before, the Act only partially regulates the law of wills.  Much of the law governing wills is left to the Courts.  Since the Act came into force, there have been many High Court declarations that particular documents are valid wills, which documents previously would not have met the required standard of a final will and testament of a deceased.  These include:

  • Unsigned draft wills;
  • A collection of documents that, when read together disposed of the will-maker’s estate;
  • An unsigned will prepared on a will kit form where the will-maker had discussed her wishes with her surviving children at different times; and
  • A letter named as a will, left with a daughter and a brother to be opened on the “will-maker’s” death.

Set out below are summaries of recent cases in which certain documents have been held to be valid wills.  Some of the restrictions on one’s ability to dispose of property by will are also noted, which show that, even where the Court finds that there is a valid will, there is not always a way.

In the Estate of Lawrence

The 2014 case of In the Estate of Lawrence dealt specifically with an application for validation of an unsigned draft will prepared for the deceased.

The deceased was diagnosed with a terminal lung disease in late 2009.  By mid-February 2013 she was very unwell.  On 1 July 2013, Ms C, a Solicitor, received instructions from the deceased about finalising the terms of her will.  A will was prepared in accordance with those instructions and taken to the deceased in hospital.  In the presence of the deceased’s daughter, the deceased confirmed that she was happy with the contents of the draft will.  Unfortunately, the deceased’s condition rapidly declined and she died before executing the will.  The deceased’s partner and daughter applied to the High Court for validation of the unsigned will.

The Court was satisfied that there was no previously executed will for the deceased and that the deceased’s wishes as set out in the draft will should be given effect to.  The Court made a declaration under section 14 of the Act that the undated and unsigned document was the valid will of the deceased.

In the Estate of Su-Yun Chiang

Another 2014 case, In the Estate of Su-Yun Chiang,dealt with “correction” under section 31 of the Act.  This provision allows the Court to make an order correcting a will if the Court is satisfied that the will contains a clerical error or does not give effect to the will-maker’s intentions.

In this case the will-maker was a Buddhist nun with a modest estate and limited family.  She made a will herself using a pre-printed form, without seeking legal advice.  The will appointed two executors and trustees, directed the payment of debts and expenses from estate funds, and provided that the residuary estate was to be held by the executors and trustees.  The will did not give any directions as to the distribution of the residuary estate (the rest of her estate).   However, at the time the will was signed, the will-maker told witnesses, including the executor, that she wanted the residuary estate to be distributed to a Tibetan monk who was a resident of the United States of America but a periodic visitor to New Zealand.

The issue for the Court to decide was whether the omission of any direction in the will to distribute the residuary estate to the Tibetan monk was a clerical error or an oversight capable of being corrected by the Court.  The Court was satisfied by the evidence that the omission of a direction regarding distribution was an oversight and made an order under section 31(2) of the Act correcting the will so that the will-maker’s expressed intentions could be given effect to.

Restrictions on testamentary freedom

It is important to note that, although the primary aim of the Act is to give effect to the ascertainable intentions of will-makers, there are still substantial restrictions on a person’s ability to dispose of his or her property by will in whatever manner he/she chooses.  The Family Protection Act 1955, the Property (Relationships) Act 1976 and the Law Reform (Testamentary Promises) Act 1949 (the Acts) have proved to be successful “tools” used to override the testamentary wishes of will-makers.

Under the Family Protection Act 1955, a spouse, partner, child, grandchild, and in some cases stepchild and step-parent, are entitled to make a claim against an estate where they have not been provided for in a will.  The Testamentary Promises Act 1949 provides for persons who have provided services to a will-maker in the expectation that payment would be provided for in the will.  The Property Relationships Act 1976 allows the revocation of gifts in a will to a spouse or partner who elects to apply for the division of relationship property under the Property Relationships Act 1976 on the will-makers’ death.

These Acts are arguably at odds with the primary aim of the Wills Act 2007 to give effect to the intentions of will-makers.  Therefore, as far as a will-maker’s intentions go, where there is a will there is not always a way.

Conclusion

Although the approach being taken by the Courts in applying the Wills Act is to ensure as far as is possible that a deceased’s wishes are fulfilled, it is advisable to seek legal advice to ensure execution of a compliant will to avoid your  family the costs, delays and uncertainty of an application to the High Court.  Furthermore, there is no guarantee that the Court will validate a will.  Additionally, in light of the restrictions imposed by the Acts mentioned above, seeking legal advice at the outset is even more imperative to ensure that, where there is a will, there is an inexpensive, simple way to give effect to your wishes.

If you would like further information please contact Daniel Shore on 07 958 7477.

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