Month: March 2025

Ngā Kerēme Mō Ngā Kura Auraki – (Making Claims For Those in State Schools and State Care)

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Are you or do you know anyone who might be entitled to a sensitive claim settlement?

Sensitive claims in New Zealand involve compensation for abuse, neglect, or mistreatment, within government institutions.  These claims address deeply personal trauma and provide justice and redress for the affected individuals.  Our team can assist in working through these things.

 

Legal Process for Sensitive Claims of Abuse in State Schools

The Ministry of Education’s process for handling sensitive claims of abuse in state schools provides individuals with a structured means to seek redress for past mistreatment or abuse. These claims can include physical, sexual, or psychological abuse that occurred while the claimant attended a state school.  This legal avenue is available for individuals who attended schools before 1989 or schools that are now closed, such as specialist schools and health camps.

The process involves several key steps, beginning with the submission of a claim form, which requires basic information and consent to access relevant records.  The Ministry may offer support services, including counselling, during the processing of the claim.  Once the claim is reviewed, an external assessor will evaluate the information, and if wrongdoing is identified, an apology or financial compensation may be offered.

Individuals who believe criminal conduct was involved can refer their case to the police.  The Ministry’s approach ensures that each claim is handled with sensitivity, providing appropriate accommodations for individuals’ needs, such as language support or legal counsel.

This legal process allows individuals to seek acknowledgment of their experiences while protecting their right to pursue further legal actions if desired.

 

Rapid Payment Options

The Ministry of Education has recently implemented rapid payment options for individuals who have attended Waimokoia/Mt Wellington Residential School and have a sensitive claim of abuse and people who are terminally ill.  These payments provide a quicker redress process compared to the full claims assessment.

Waimokoia/Mt Wellington Residential School

Claimants who attended this school can opt for a rapid payment which includes a set amount based on the decade they attended the school, reflecting average payments under the full claims assessment process, an apology from the Secretary for Education and a reimbursement for legal costs.

Payments are determined by the decade in which a claimant attended school.  For example, a claimant who attended Waimokoia/Mt Wellington Residential School in the 1960s would receive $5,000, while a claimant who attended in the 1970s would receive $10,000.

Extra payments may be made if there is evidence of specific instances of abuse during certain years.   For example, a claimant who attended between 1960 and 1961 would receive $15,000, which includes the standard $5,000 for the 1960s and an extra $10,000 due to documented staff abuse during that period.

 

Future of Rapid Payment Options

Currently only claimants who attended Waimokoia/Mt Wellington Residential School are eligible for the rapid payments option however, once research for McKenzie Residential School and Campbell Park School is completed, rapid payments will also be available for claimants who attended these schools.

 

Terminally Ill Claimants

Individuals who are terminally ill and expected to live less than 12 months can receive a prioritised settlement payment of $10,000, along with an apology and legal fee reimbursement.

 

Sensitive Claims Through Other Government Agencies

Currently, survivors of historical abuse in State care can make a claim through various government agencies such as:

 

(a) Ministry of Education

(b) Oranga Tamariki

(c) Ministry of Health

(d) Ministry of Social Development

 

If you would like assistance with making a claim or further information and advice, please contact Preston Rawiri on 07 957 2352 or preston.rawiri@mccawlewis.co.nz

Directors’ Duties in Tough Economic Times: What You Need to Know

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Directors of companies in New Zealand are facing ever more challenging economic conditions characterised by varying interest rates, inflation, and market volatility.  During periods of financial stress, directors must navigate complex legal responsibilities carefully, as failure to comply with statutory duties can lead to severe consequences, including personal liability and regulatory penalties.

Here’s a quick look at the key directors’ duties under the Companies Act 1993 (the Act) and some practical advice on how directors can mitigate risks during these trying times.

 

Core Duties of Directors

Under the Act, directors are bound by several fundamental obligations.  Firstly, directors must always act in good faith and in the best interests of the company.  In tough economic conditions, acting in the company’s best interests might involve making difficult but necessary decisions such as restructuring, cost reductions, or pursuing external investment.

Directors also have a duty to exercise the level of care, diligence, and skill that would be expected of a reasonable director in similar circumstances.  Practically, this means staying informed about the company’s financial health and being actively involved in its decision making.  The directors’ vigilance is particularly key in avoiding reckless trading, as continuing business operations in a manner that risks substantial loss to creditors is prohibited.

Further obligations arise when the company is approaching insolvency.  Directors must avoid incurring new obligations if there is a reasonable belief that the company may not meet these liabilities.

 

Key Risks for Directors in Financially Stressed Businesses

Economic downturns introduce heightened risks for directors, particularly around cash flow management and creditor relationships.  Ensuring that the company maintains its ability to meet payment obligations is essential, as failure to do so can expose directors to potential legal actions from creditors.  Additionally, insolvent trading, which is continuing operations while unable to meet financial commitments, can lead to personal liability for directors.

In such conditions, directors are often subject to increased scrutiny from stakeholders, including shareholders, creditors, and regulatory authorities. Creditors may seek to call in debts owing, and shareholders have rights of action under the Act against the company and directors personally, as well as potentially the right to bring actions against directors on behalf of the company. Regulatory authorities can impose fines and, in a worst case scenario, criminal sentences.

Directors’ actions must demonstrate transparency, responsible governance, and compliance with all legal obligations to minimise potential claims or regulatory intervention.

 

 

Practical Guidance for Directors

To safeguard themselves and their companies, directors should take several proactive measures. Regular financial monitoring is key here, with close attention paid to cash flow, profit margins, and the company’s liabilities.  Financial performance should be reviewed at a Board level regularly and rigorously.

To navigate complex situations and to minimise personal risk, directors should seek professional legal and financial advice early and often.

Transparent and honest communication with stakeholders is equally important, as proactive dialogue can help quell any uncertainty and avoid disputes or shareholder action.

Directors should also be open to exploring restructuring options, such as voluntary administration, creditor compromises, or, where necessary, winding up the company.

 

Recent Case Highlight

A recent and significant case highlighting the importance of directors’ duties is Yan v Mainzeal Property and Construction Limited [2023] NZSC 113.  Mainzeal was placed into liquidation in 2013, owing unsecured creditors approximately $110 million.  The Supreme Court found that the directors breached sections 135 (reckless trading) and 136 (duties in relation to obligations) of the Act.  The directors had improperly relied on informal assurances of financial support without enforceable guarantees.  The directors were ordered to personally pay $39.8 million (plus interest).  This decision highlights the necessity for directors to rigorously adhere to statutory obligations, particularly around solvency and creditor protection, at the risk of their own personal liability.

 

Final Thoughts

Tough economic conditions demand directors demonstrate cautious, informed leadership and strict compliance with the statutory duties outlined in the Act.  By understanding these obligations and proactively managing financial risks, directors can effectively navigate periods of economic uncertainty. Seeking timely professional advice is essential to mitigate potential liabilities and ensure informed decision making that protects both the company and its directors.

If you are a director experiencing financial challenges, consulting with your legal and financial advisers can provide essential guidance on fulfilling your obligations and safeguarding your business.

Recent Decisions from the Supreme Court on Trusts – What they Mean for You

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Two recent Supreme Court decisions – Cooper v Pinney and Legler v Formannoij – appear to send conflicting signals about acceptable levels of control over trusts.  On one hand, Legler suggests that a single person effectively controlling a corporate trustee does not, in itself, undermine a trust.  On the other hand, Cooper implies that trust control needs closer scrutiny when considering whether relationship property claims may apply.

For those setting up, managing, or attempting to challenge trusts, this inconsistency raises an important question: when does control over a trust amount to ownership, and when is it simply part of a valid trust structure?

 

The Tension at a Glance

 

At the heart of the decisions is a fundamental tension:

1. In Legler the Court upheld a trustee appointment despite allegations that it was made for an improper purpose. The dispute arose when the children of the deceased settlor challenged their stepmother’s decision to appoint a corporate trustee of which she was the sole director and shareholder. The Court ruled that while she effectively controlled the company, this did not necessarily mean the appointment was improper. The result reinforces that controlling a trust alone is not inherently problematic in equity.

2. In Cooper the Court took a different approach when assessing control in the context of relationship property. The dispute centred on whether Mr Pinney’s powers within a family trust—such as the ability to appoint and remove trustees and distribute assets—constituted property under the Property (Relationships) Act.  If classified as property, the powers may have fallen into the relationship property pool to be divided between Mr Pinney and Ms Cooper following the breakdown of their relationship.  However, the Supreme Court ruled that, because the powers were constrained by fiduciary duties, they did not constitute personal property interests.

The rulings certainly appear at odds and highlight the different approaches taken in trust law (often focussed on process rather than effect) and relationship property (designed to prevent unfair outcomes in asset division).

 

Key Practical Takeaways

How should you approach structuring and administering your trust in light of these decisions?

 

1. Structure Trust Control Carefully

Carefully consider who will have control over your trust. If you hold extensive powers as a settlor, trustee, beneficiary, and the person having the power to appoint and remove trustees, this could lead to scrutiny under the Property (Relationships) Act, though perhaps not in trust law.  Adding independent trustees and/or requiring unanimous decisions for key trust actions can help reduce this risk.

 

2. Record and Document Trust Decisions

Courts look to both process and intent, and keeping clear records of trustee decisions can help justify each of these in a situation where a claim is made against your trust.  If a decision is questioned, having a well-documented history of the background and reasoning for the decision will be crucial in proving that a trust has been managed properly. The records should address how the particular decision is ultimately in the beneficiaries’ interests.

 

3. Recognise and Accept that Relationship Property Law Has a Different Lens than Equity

Just because a structure is legally valid does not make it immune to relationship property claims. Seek legal advice on how your powers could be interpreted under the Property (Relationships) Act.

 

Final Thoughts – A Balancing Act

 

The Supreme Court’s recent rulings highlight an ongoing challenge in trust law:  balancing the need to respect valid trust structures while preventing misuse. The key takeaway is that trust control is not a straightforward issue – it depends on the context. The decisions offer a timely reminder that trust structures must be well-thought-out prior to formation and should be regularly reviewed throughout the lifetime of the trust to ensure that they are defendable in different legal scenarios.

 

If you have questions about how these rulings may affect your trust or have concerns about protecting your assets from the possibility of a claim, our Asset Planning Team is here to help. Contact us to discuss a review of your trust and ensure your structure continues to provide the protections you require.

Understanding the Residential Tenancies Amendment Act 2024: Key Changes to New Zealand’s Rental Laws

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The Residential Tenancies Amendment Act 2024 (the Act) introduces a series of significant changes to New Zealand’s rental laws, aimed at improving tenant security, modernizing tenancy processes, and fostering a fairer balance between the rights of landlords and tenants.

Here’s a brief look at the major changes under the new law:

1. Bond Lodgement and Online Payments

One of the key changes in the Act is the requirement for all tenancy bonds to be lodged and paid online. Previously, tenants and landlords were required to physically submit bond payments and sign documents. Now modernized, this process is streamlined and simplified, with all bond payments handled electronically. This not only improves efficiency but also enhances transparency and ease of access for both landlords and tenants.

Additionally, this online system ensures that bond processing is quicker, reducing any delays or errors that may have occurred with the old paper-based system.

2. Termination of Tenancies

The amendments make significant adjustments to how and when tenancies can be terminated.

Periodic Tenancies: Previously, landlords could only end a periodic tenancy if they had a specific termination ground, for example, demolishing the property or carrying out extensive renovations. This has changed significantly with the new amendments. Now, landlords must provide at least 90 days’ notice to terminate a periodic tenancy without a specified cause. However, if the landlord has specific intentions—such as the intention to sell the property or move into it themselves—the notice period is shortened to 42 days.

For example:

  • If the landlord intends to sell the property and needs the tenant to vacate for the sale process, they are required to provide a 42-day notice.
  • The same applies if the landlord (or a close family member) plans to move into the rental property.

Automatic Transition of Fixed-Term Tenancies: The Act also ensures that fixed-term tenancies, which previously ended on a set date, will automatically roll over into periodic tenancies unless a landlord or tenant gives notice to end a fixed-term tenancy between 90 and 21 days before the fixed term ends, no specific reason is required. Or, the parties agree otherwise, for example, to renew the fixed term or to end the tenancy.

These changes offer tenants more predictable and stable living conditions, while also clarifying the process for both landlords and tenants.

3. Family Violence Provisions:

The Act also clarifies that a tenant’s children or dependants may withdraw from a tenancy due to family violence.

If a tenant or their child/dependant experiences family violence during a tenancy, they now have the ability to withdraw from the tenancy by giving at least 2 days’ notice (with qualifying evidence of family violence) without any financial penalty, or agreement required from the landlord.

4. Pet Provisions

One of the most anticipated changes under the Act is the way tenants can now request to have pets in rental properties. Previously, landlords had the right to refuse tenants’ requests to keep pets without having to provide a reason. The Act shifts this, allowing tenants to request pets with the understanding that landlords can refuse—but only for legislated reasons.

These reasons are non-exhaustive, but could include:

  • Concerns about damage to the property
  • Allergies or other health concerns of the landlord or other tenants
  • Incompatibility with other tenants’ pets or lifestyles

Landlords will also be able to require a ‘pet bond’ up to a maximum value of two weeks’ rent (in addition to the regular rental bond).

5. Other Technical Changes

Smoking Restrictions

The Act now clarifies that landlords can include smoking bans in their tenancy agreements. Smoking-related damage to properties, particularly from smoke residue or fire risks, has long been a concern for landlords. By giving landlords the option to impose smoking restrictions, the Act ensures that tenants maintain the property in good condition, while also fostering healthier living environments.

Communication via Email

Acknowledging the importance of digital communication in today’s world, the amendment allows email to be used as a valid form of communication between landlords, tenants, and Tenancy Services. This modernization reflects the growing reliance on technology and aims to make the process of sending and receiving important notices, agreements, and documents more efficient, accessible, and reduces reliance on slower, paper-based communication.

Simplified Tenancy Tribunal Dispute Resolution

Another important change involves the Tenancy Tribunal, the body responsible for resolving rental disputes. The Act allows for disputes to be resolved without formal hearings in some cases, potentially reducing the need for long waits and time-consuming legal processes. Instead, the Tribunal can resolve certain issues based on documentation or virtual hearings, making dispute resolution more efficient for both landlords and tenants.

Conclusion

The Residential Tenancies Amendment Act 2024 represents a major shift towards more equitable, transparent, and efficient rental laws in New Zealand. This new legislation creates a fairer balance between the rights and responsibilities of landlords and tenants. These changes modernize the rental experience, ensuring that both parties have clear guidelines and protections in place.

We are happy to discuss anything in this article that may have captured your attention.  Feel free to get in touch.

Contact us

HAMILTON OFFICE

P. 07 838 2079

E. reception@mccawlewis.co.nz

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New Zealand

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