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Testamentary guardians: Should your child have one?

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The Care of Children Act 2004 makes provision for a parent to appoint “Testamentary Guardians” for their children through their will.  A Testamentary Guardian will become that child’s guardian automatically when the parent dies and will not be required to make an application to the Family Court.  A Testamentary Guardian can be appointed to care for a child up until that child reaches the age of 18 years (or younger in certain circumstances).

What are Testamentary Guardian responsibilities?

Testamentary Guardians are responsible for making decisions relating to the child’s day-to-day care including, but not limited to, where and with whom the child lives, where the child goes to school and decisions relating to medical treatment.

Testamentary Guardians have the same responsibilities as a parent, however they are not automatically entitled to have the child in their direct day-to-day care.  In order for direct day-to-day care, the Testamentary Guardian will need to apply to the Family Court for a Guardianship or Parenting Order.

What to consider when appointing a Testamentary Guardian

Some aspects which you may wish to consider when choosing a Testamentary Guardian include:

  • Who is a good role model for your child?
  • Who will raise your child the way you would like your child to be raised?
  • Who is in the best position to raise your child (both financially and emotionally), and are they in good health?
  • If you have an only child, will your child struggle to adjust to a family of, say, five children?  Or will that family struggle to adjust to the new addition?
  • If you have more than one child, can you keep the children together under the same Testamentary Guardian’s care?
  • Where does the Testamentary Guardian live?
  • What values and beliefs does the Testamentary Guardian have?  Are they similar to yours?
  • The age of the proposed Testamentary Guardian.  As a minimum, they must be over 20 years old.
  • Is the Testamentary Guardian aware of their proposed appointment?  It is best to discuss with the Testamentary Guardian before you name them in your will.
Can the appointment be challenged?

The appointment of a Testamentary Guardian can be challenged by way of an application to the Family Court.

As Testamentary Guardians can be appointed after the death of only one of their parents, the Testamentary Guardian will be a guardian alongside the surviving parent. If the surviving parent disapproves the appointment of that Testamentary Guardian, they can challenge that appointment through the Family Court.

Why are Testamentary Guardians important?

If both parents (or one parent in some situations) die without a Testamentary Guardian appointed, it will be a decision of the Courts to appoint a guardian for your children.  There is no guarantee that your child/children will be appointed a Testamentary Guardian that you would have chosen yourself.  Therefore, it is important to outline your wishes with regards to Testamentary Guardians of your child/children in your will.

If you would like further information please contact Amanda Hockley on 07 958 7451.

Beneficiary access to information – The new Trusts Bill

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As it stands a beneficiary of a Trust does not have a right (as such) to information held by the Trust.  Although beneficiaries are entitled to request information from trustees, whether or not that information is provided is a discretionary matter for trustees to decide in exercising their fiduciary duties to beneficiaries.

Essentially what the right answer is to the question of whether or not to disclose Trust information is situation dependent.  The Court has come up with a list of factors for trustees to consider when deciding what, if any, information should be disclosed to a beneficiary, but those factors are not common knowledge.  Helpfully, they have now made their way into the new Trusts Bill.

If the new Trusts Bill is enacted, the law around disclosure of information to beneficiaries will be made clearer in the sense that the general principles around disclosure and the factors to be taken into account in deciding whether or not to disclose will be set out in the Trusts Act.  The position will be as follows:

  • A trustee will generally need to make available to a sufficient number of beneficiaries sufficient Trust information to enable the terms of the Trust to be enforced against the trustees;
  • A trustee will not be able to withhold all Trust information from all beneficiaries;
  • There will be a presumption that a trustee must disclose the following basic Trust information to a qualifying beneficiary, (a beneficiary who is reasonably likely to receive Trust property under the terms of Trust).  Although it can be withheld from some, it cannot be withheld from all beneficiaries:
    • The fact that a person is a beneficiary of the Trust;
    • The name and contact details of the trustee;
    • The occurrence of, and details of, each appointment, removal, and retirement of a trustee as it occurs; and
    • The right of the beneficiary to request a copy of the terms of the Trust or Trust information.
  • A trustee will still be able to refuse to provide information (including the basic Trust information), however, only after considering the general obligation to provide information (as above) and also the following factors:
    • The nature of the interests in the Trust held by the requesting beneficiary and the other beneficiaries of the Trust, including the likelihood of the requesting beneficiary receiving Trust property in the future;
    • Whether the information is subject to personal or commercial confidentiality;
    • The expectations and intentions of the settlor when the Trust was created as to whether the beneficiaries, and the qualifying beneficiary in particular, would be given information (if known);
    • The age and other circumstances of the requesting beneficiary and the other beneficiaries of the Trust;
    • The effect of giving the information on the trustees, other beneficiaries of the Trust, and third parties;
    • In the case of a family Trust, the effect of giving the information on relationships within the family and the relationship between the trustees and some or all of the beneficiaries to the detriment of the beneficiaries as a whole;
    • In a Trust that has a large number of beneficiaries or unascertainable beneficiaries, the practicality of giving information to all beneficiaries or all members of a class of beneficiaries;
    • The practicality of imposing restrictions and other safeguards on the use of the information (for example, by restricting who may inspect the documents);
    • The practicality of giving some or all of the information to the beneficiary with confidential or sensitive information removed; and
    • The nature and context of the request.

Although, as noted, the position around disclosure of information to beneficiaries has been made clearer in the new Trusts Bill, this will not necessarily result in any changes in a practical sense.  That is because, to a large extent, the provisions in the Trusts Bill simply incorporate the legal principles that already apply now to a decision about disclosure.

The presumption in the Bill is on disclosure and the Bill makes it clear that trustees will not be able to refuse to disclose information to all beneficiaries.  However, trustees will still have the discretion to refuse to disclose information to a vast majority of the beneficiaries.  If a beneficiary does not accept a trustee’s decision, an application to the Court for an order that the trustee disclose the information can still be made.

In terms of progress with the draft Trusts Bill, it appears that the Trusts Bill Consultation Team is still considering the submissions that have been made on the Bill and working through some of the issues raised.  They have recently been in contact with the Law Society regarding their submission, as well as additional questions on the Bill generally.  So progress is being made, but it still likely to be some time before we have a new Act.  At this stage it is a matter of ‘watching this space’.

If you would like further information please contact Amanda Hockley on 07 958 7451.

Resource legislation amendments – Changes to the land acquisition process

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In this article, we provide an overview of the amendments to the land acquisition process under the Public Works Act 1981 (“the Act”) which has been amended as part of the Resource Legislation Amendment Act 2017.

What is the Public Works Act?

The Act gives power to the Crown to acquire land for public works, and sets out the payments that may be made to the former owners of the land as compensation. The Crown may take land for a wide variety of purposes, such as the building of new roads, schools or parks.

Land Information New Zealand (“LINZ”) is responsible for administering the Act on behalf of the Crown. A number of organisations are able to apply for land under the Act. Usually these designating authorities will be State Owned Enterprises or territorial authorities such as your local or regional councils.

What are the reforms to the Resource Management Act?

While there have been a number of amendments to the Resource Management Act since its inception 26 years ago, this is certainly the most comprehensive package of reforms to date.

There are almost 40 amendments included along with changes to 5 other Acts. The changes seek to create a resource management system that achieves the sustainable management of natural and physical resources in an efficient and equitable way.

As expected, there has been a great deal of interest on the amendments from a raft of stakeholders, including district councils, corporations, iwi, professional associations and organisations, community groups, and individuals.  There have been a number of concerns raised by stakeholders, however the issues raised are primarily concerned with the resource consent and plan making process and there were no major issues raised on the amendments to the land acquisition process.

The amendments

The changes are summarised below:

  • Additional compensation for land which includes the owners’ home:  The Act now provides for compensation of up to $50,000 (previously only $2,000) to be provided to the owners of notified land if the land contains a dwelling that is used as the land owners’ principal place of residence. An agreement for vacant possession of the land must be agreed within 6 months for the maximum compensation to be available.
  • Additional compensation for land which doesn’t include the owners’ home:  The Act also provides for compensation of up to $25,000 to be provided to owners of notified land if the land does not contain a dwelling that was used as the land owners’ principal place of residence. The level of compensation for this type of land depends on the value of the land.
  • Changing compensation limits payable:  Previously the compensation limits set out above could not be changed without amending the Act. To allow the limits to be updated as required more efficiently, the amendments allow the Governor General to increase the limits by Order in Council on the recommendation of the Minister.
  • Delegating the function of issuing ‘notices of desire’:  The Minister of Land Information can now delegate the power to issue a notice of desire to acquire land to LINZ.
  • Evidence from previous RMA cases for hearings:  The Environment Court may now accept evidence that was presented at a related RMA hearing, inquiry or appeal and direct how evidence is to be given to the Court. A separate presentation of such evidence was previously required which was costly and inefficient.
Conclusion

The amendments to the Act are in general support of the government’s intention to better align and integrate the resource management system, and ensure the land acquisition processes are fair and efficient.

Over the last few years the Waikato landscape has undergone some significant changes with more such changes to come.  The Act provides for the land needed for these projects to be accumulated and set aside.  It is important to consider the implications of the Act if you become involved in an acquisition and to stay informed about public works, in particular if you are purchasing or selling property.

If you are looking to purchase a property and are unsure about how these projects may affect your new property, it is advisable to do your research.  Websites such as Land Information New Zealand and New Zealand Transport Agency both provide up to date information and plans for these projects. A Land Information Memorandum (LIM) may also list any proposed or existing transport network projects in the local area.

Amanda is an Associate in our Property Team and can be contacted on 07 958 7451.

Protecting Māori interests in the Takutai Moana

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The Marine and Coastal Area (Takutai Moana) Act 2011 acknowledges the importance of the marine and coastal area to all New Zealanders and provides for the recognition of the customary rights of iwi, hapū and whānau in the common marine and coastal area.  Public access to the common marine and coastal area is guaranteed by the Act.

The marine and coastal area is the area between the mean high water springs and the outer limits of the territorial sea – 12 nautical miles from shore.  The common marine and coastal areas are the parts of the marine and coastal area that aren’t in private ownership or part of a conservation area.

The due date for filing applications to the High Court seeking an order recognising customary interests, or to file an application to the Crown for direct engagement was 3 April 2017.  Over 380 applications were made under the Act.  We set out below a brief summary and update of the process to date.

High Court

For the High Court process:

  • Public notices of the applications were due 20 working days after filing an application;
  • Anyone who may be affected by an application was able to file a notice of appearance within 20 working days of those notices being filed; and
  • The Attorney-General has proposed a grouped approach to the Court for dealing with the High Court applications based on specific areas of the coastline.
Crown Engagement

For the Crown engagement process, we understand that the Crown is currently processing the applications received.  No set timeframes for managing these applications and commencing engagement have been confirmed by the Crown.

Information regarding both processes in general is available on the Ministry of Justice website at https://www.justice.govt.nz/maori-land-treaty/marine-and-coastal-area/

Our Team has experience with direct engagement and negotiations with the Crown, and High Court matters.

Jerome is a Solicitor in our Māori Legal Team and can be contacted on 07 958 7427.

2017 Unit Titles Reforms

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Introduction

The Regulatory Systems (Building and Housing) Amendment Act 2017 and the Unit Titles Amendment Regulations 2017 each came into force on 30 May 2017.  Many of the changes are cosmetic or technical, and much of the legislation remains untouched, but there are some substantial changes that need attention.

Definitions and format

A number of definitions in sections 5-7 of the Act have been tidied up.  Most notably:

  • The definition of body corporate operational rules has been amended to clarify that operational rules may be lodged when the unit plan is deposited, or after that.
  • A principal unit may now be more than one car park: the difficulty of only a single car park (rather than multiple parks) being able to be a principal unit has now been overcome.
Ownership and utility interests

Deemed utility interests for future development units (FDUs) have been clarified.

The revised section 41(1) records that ownership interests or utility interests may be reassessed by special resolution at a general meeting.  The revised section 41(3) states that a reassessment may be made only if 36 months have passed since the deposit of the unit plan or the last reassessment (if any), or the reassessment is for the purposes of a redevelopment.  This is a useful addition, as reassessments may arise in situations such as cancellation outside the timeframes otherwise permitted by section 41.

A reassessment of ownership interests must be made on a valuer’s assessment of relative value, while a reassessment of utility interests may be made on a fair and equitable basis, having regard to relevant benefits and costs.  However, any reassessment of utility interest not based on relative value must have the methodology approved by special resolution.  This highlights that determining a utility interest that is different from ownership interest is a difficult exercise.

Proceeds from common property

Section 56(7) has been amended to clarify that where proceeds are to be distributed following a sale, lease, or licence of common property, the distribution is to take place as at the date that payment fell due.  This useful change allows for periodic payments to be paid out to owners.

Easements and covenants

Changes to sections 62 and 63 clarify that an easement in gross may be granted over common property and/or a unit, which will be particularly useful to utility providers.  The amendments also allow for covenants in gross, when these are enabled by Land Transfer Act reforms.

Redevelopments

Changes to section 65 mean that ‘minor’ redevelopment must not:  ‘affect the common property’ (previously, this was ‘materially affect’); ‘materially affect’ the use, enjoyment or ownership interest of another unit (no change); nor ‘change the number of units’ (entirely new).  The scope of a minor redevelopment has therefore been restricted.

EGM

The new section 89A usefully clarifies that an EGM must be held if a notice requesting an EGM, proposing resolutions, and signed by 25% or more of unit owners (presumably based on numbers) is received by the chairperson.

The EGM ‘must be called by the chairperson’ where required by section 89A.  The new section 90(3) sets out that an EGM ‘may be called at any other time by the chairperson or the body corporate committee in accordance with the regulations’.

Cancellation

The cancellation provisions of section 177 have been amended.  Importantly, section 177(3) now provides that if there is a special resolution to cancel the unit plan, then either:

  • The ownership interests may be reassessed by a registered valuer; or
  • The body corporate may decide by special resolution not to reassess ownership interests, as long as reasons are stated.

This is an important and useful change, as reassessments on cancellation have proved problematic and often unnecessary.

In the case of cancellation by court order, the application to the Registrar under section 189 must now include a certificate that all conditions and directions of the High Court have been complied with.

Designated resolution

There are now two additional circumstances under which a designated resolution may arise: a variation of lease under section 167, and a decision not to reassess ownership interests on cancellation under section 167.

Regulations – EGM

The Unit Titles Amendment Regulations 2017 amend the existing 2011 regulations, largely for consistency with the amending legislation described above.  There are also some amendments to the forms.

Conclusion

As noted from the outset, much of the legislation remains untouched.  There are substantive issues needing urgent attention: not just those in the Discussion Document released in December 2016, but a host of other technical and policy issues.  Further reform of the law relating to unit titles is needed.

If you would like further information please contact Dale Thomas on 07 958 7428.

Trust busting (Part 2): Constructive trusts

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There have been a number of Court decisions in recent years in which it has been found in one way or another that assets of a trust can be accessed for the purposes of a relationship property division.

One of the notable recent cases is Clayton v Clayton, which was the subject of my November 2016 article.  In that case the assets of the trust became part of the relationship property pool because the provisions in the trust deed essentially gave Mr Clayton full power over the trust’s assets.  This meant that he was able to make decisions that were not necessarily in the best interests of the beneficiaries and that could have been solely to serve his own interests, including transferring all of the trust property to himself.

Trust assets have also been classed as relationship property in situations where the trusts have existed for some years, prior to the commencement of the relevant relationships, and in many cases have been family trusts.  In these cases “constructive trusts” have been found by the Courts to exist – trusts created by law over certain assets, including existing trust property, essentially because that is the “right thing to do”.  One of the most recent leading cases of that nature is the Court of Appeal case, Vervoort v Forrest & Ors [2016] NZCA 375.

Vervoort v Forrest & Ors – background

In the Vervoort case the William Duffy Family Trust (the “trust”) was formed well before the parties began their 12 year relationship.  At the time of the hearing the trust owned significant assets in both New Zealand and Fiji.  Mr Duffy, or the trust, also had a number of other assets, including shares in various companies.  Given his/the trust’s significant financial resources and the fact that Ms Vervoort was not in paid employment, from an early stage in their relationship Mr Duffy provided the funding for their lifestyle.

After having relationship issues for some years, the parties eventually separated and negotiated a settlement of their relationship property issues.  One of their agreements included a payment by Mr Duffy to Ms Vervoort of $327,000.  However, despite that purported settlement, proceedings were ultimately brought by Ms Vervoort against Mr Duffy.

Ms Vervoort’s relationship property claim included arguments that she was entitled to a share of certain trust property.  One of those arguments included that a constructive trust had been created in her favour over a lifestyle block in Auckland, which the parties lived in for a period with two of Ms Vervoort’s sons and one of Mr Duffy’s.

Constructive trusts and contributions

In considering whether a constructive trust did exist, the Court set out the requirements for a constructive trust from the case Lankow v Rose.  The four key features are:

  • Direct or indirect contributions to the property;
  • The expectation of an interest in the property;
  • That such expectation is a reasonable one; and
  • That the defendant should reasonably expect to surrender an interest to the claimant.

The Court added that the contributions need not be monetary and that they have to have caused the acquisition, preservation, or enhancement of the owner partner’s assets, whether directly or indirectly.

Ms Vervoort argued that she helped Mr Duffy find the Auckland property, she helped to redecorate and refurbish a cottage that was on the property and that she maintained the property by cleaning it regularly, maintaining the house and gardens, the swimming and spa pools and caring for the animals.  Mr Duffy did some work around the property but was inhibited by a severe knee problem.

The Court’s decision

In deciding whether or not a constructive trust existed the Court considered a number of other similar cases.  In doing so it was acknowledged that it would not be common for rights and obligations under an express trust to be subject to a constructive trust –  that it would take something exceptional before the Court would find it “unconscionable” for a trustee to be allowed to follow the trust.  It is clear from the Court’s analysis of those cases that in successful constructive trust claims the claimant will have contributed to assets of the express trust and their value will reflect those contributions.

Although in the Vervoort case the Court considered that it was possible that a constructive trust claim could exist, Ms Vervoort’s claim failed.  This appears to be because of a lack of evidence in terms of her contributions to the Auckland property.  No attempt was made in her evidence to show any increase in the value of trust assets, she was not in a position to put money into the trust properties, and the Court did not consider her work and help to be a great contribution to the value of the assets.  Mr Duffy was at least partially retired and there was no indication that her support of him assisted him in building or maintaining his assets.

Also relevant was that Ms Vervoort had the benefit of living in houses or apartments owned by the trust throughout much of the parties’ relationship and had enjoyed extensive travel.  Against that background the Court considered that any entitlement under a constructive trust in Ms Vervoort’s favour would likely be significantly less than the settlement of $327,000 she had already received.

Lessons

Common cases in which constructive trusts have been argued and upheld include cases in which the family trust owns a farm property and the son/daughter and their spouse operates the farm and carries out improvements to it over a number of years.  In some cases promises have been made, and in others the settlors’ intentions have not been clear but the key features of a constructive trust have nonetheless been made out.

The lesson in this is to make sure that, if the intention is not for an interest in the relevant property to be passed on, any significant or ongoing contributions made to the property are clearly recorded and explained (for example, a non-monetary contribution could be made in lieu of paying rent).  The reason for this is to remove any argument that there was any expectation of an interest in the property in return for those contributions.

If you would like further information please contact Renika Siciliano on 07 958 7429.

New standards for the testing of meth-contaminated properties

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In this article, we provide an update on the development of new standards for the testing and treatment of properties contaminated by methamphetamine (“meth”).

With the number of houses contaminated by meth reported to be on the rise both in Waikato and throughout New Zealand, the public awareness and demand for meth testing is also increasing steadily.

The production of meth creates a toxic by-product; the residue of which, once absorbed into a property’s surfaces, carries a range of health risks.  Carcinogenic to all who inhale it, these residues have been shown to be particularly dangerous to young children.  Besides the negative health effects, the owner of a contaminated house can also face a decrease in property value, loss of rental income during the process of decontamination, and in extreme cases, the costs of significant renovation or even demolition.

To avoid the risk of purchasing a meth-contaminated property, prospective purchasers should consider including a specific meth testing condition in their agreement for sale and purchase.  Landlords should also be aware that they could be failing their obligations under the Residential Tenancies Act 1986 to provide a “reasonable state of cleanliness” if they knowingly rent out a contaminated property.  Landlords should consider testing their rental property for meth contamination between tenancies.  There are a growing number of New Zealand businesses that provide meth testing and decontamination services.

The Ministry of Health in 2010 published the Guidelines for the Remediation of Clandestine Methamphetamine Laboratory Sites.  This set out a number of relevant points in regards to meth testing.  Notably:

  • Any room occupied by a child under the age of 16 should be sampled;
  • No fewer than five samples should be taken inside the building;
  • The acceptable level of meth to occupy a property is 0.5micrograms/100cm2; and
  • Professional testers must operate independently of commercial clean-up companies, and should use the recognised standard NIOSH 9111 sampling method.

Standards New Zealand is currently engaged in creating the new standard NZS 8510: Testing and decontamination of methamphetamine-contaminated properties.  This is expected to be published late in June 2017, and should provide a consistent and effective approach to managing the testing and decontamination of affected properties and the treatment of their contents.

The proposed new standard will be particularly relevant for meth testing and decontamination companies, laboratories, and health and safety regulators as it will set out a clear framework for the procedures for decontamination and remediation of properties, methods of disposal of materials and for assessing risks to health and safety.  It will also be of interest to property owners as the standard should support and encourage auditing processes.  Ultimately, compliance with the proposed new standard should promote confidence in the effectiveness of meth testing, decontamination and remediation measures.

If you would like further information please contact Dale Thomas on 07 958 7428.

Changes to the construction retentions regime

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You may be aware of the new statutory regime for construction contract retentions which comes into force at the end of this month.  Essentially the new law imposes a trust regime around retention funds.  We highlight some key information on the law change below.

The Construction Contracts Amendment Act 2015 (“CCAA”) introduces amendments to the Construction Contracts Act 2002, with effect from 31 March 2017.  The retention money requirements only apply to commercial construction contracts entered into, or renewed, on or after 31 March 2017.

The new retentions regime applies to all retention funds held in relation to head contractors and sub-contractors (at this stage MBIE does not propose to set a de minimis threshold for the level of retention).  So a contractor will benefit from the protections of the new regime where it is a head contractor, but it will also be subject to the new regime in relation to how it deals with sub-contractor retentions.  It is not permitted to contract out of the new regime.

Central to the new retentions regime is the concept of a “trust” arrangement:

  • Retention money is to be held on trust by Party A (the principal, or contractor in a subcontracting arrangement) for the benefit of Party B (the contractor or subcontractor), and may only be held in the form of cash or other liquid assets that are readily converted into cash.
  • Retention money is not available for the payment of debts of Party A (other than Party B).  In the event of a retention holder’s insolvency, retention money will be protected.
  • Retention money does not need to be held in a separate trust account and may be commingled with other moneys (although establishing a separate trust account would be best practice).
  • A party holding retention funds must keep proper accounting records of all retention funds (we comment on this further below) and make those records available for inspection at reasonable times and without charge.
  • Retention money may only be used to remedy default in the performance of Party B’s obligations under the contract.

The CCAA has rules around investment of retention money and accounting for interest.  Any investments must be subject to the Trustee Act 1956.  Any interest earned on invested retention money belongs to the retention holder, to offset the administration costs of the new regime.  Interest must be paid on late payments of retentions at the rate agreed under the contract.  If a rate has not been agreed, the default rate of interest specified in regulations will apply (currently the regulations have not been developed).

A retention holder must account for any difference between retention money withheld and paid out.  Contracts should outline the procedures for the retention holder to lawfully use/deduct (or “appropriate” – the language used in the CCAA) the retention money.

Retention holders assume all the statutory and implied duties, obligations and liabilities of a trustee, including those under the Trustee Act 1956, in accounting for and managing retention money – including director liabilities.  At its most extreme, a breach of trust may be a criminal offence.

The parties to a construction contract are prohibited from:

  • Making the payment of retention money conditional on anything other than the performance of Party B’s obligations under the contract – an extension to the existing Construction Contracts Act rules prohibiting “pay when paid” (conditional payment) clauses.  Party B’s obligations may be pre-practical completion obligations (such as the payment of liquidated damages) and post-practical completion obligations (such as the rectification of defects during the defects notification period);
  • Making the date of payment of retention moneys later than the date on which Party B has completed all of its obligations under the contract; and
  • Requiring Party B to pay any fees or costs for the administering of a trust holding such retention funds.

The methods of accounting for retention money are set out in the CCAA.  The government has taken a reasonably light touch approach;  the CCAA requires the holder of retention funds to keep “proper accounting records” of all retention money held that:

  • Correctly record all dealings and transactions in relation to the money;
  • Comply with generally accepted accounting principles; and
  • Are readily and property auditable.

The feedback from MBIE is that it expects industry participants to “develop reporting methods that best suit the accounting systems they have in place” – so the government is not being overly prescriptive as to how compliance should be achieved.

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

Changes to Enduring Powers of Attorney 2017

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The amendments to the Protection of Personal and Property Rights Act 1988 (PPPR Act) came into force on 16 March 2017.  The changes include new plain language forms of Enduring Power of Attorney (EPA) and a plain language explanation of the effects and implications of these.  The idea behind the changes was to make the forms as simple as possible while maintaining legal accuracy and clarity.

The changes made are summarised as follows:
Less restrictive requirements for mutual appointments

The changes will allow the same authorised witness for the respective donors where there is no more than a negligible risk of conflict of interest.

Standard explanations

The changes provide that the donor’s witness may use the standard explanation to explain the effects and implications of the EPA.

Optional provisions revoking previous EPAs and provision for giving notice of this revocation

There will be an option in the new forms to revoke all previous EPAs and for giving notice of this revocation, including after the donor loses capacity.

Duty of attorney to consult

Consultation will be required with any other EPA attorney of the donor (but not with a successor attorney whose appointment has not taken effect).

Medical certificates

The medical certificate must still contain the prescribed information but no longer needs to be in the prescribed form.

Revocation of appointment

A donor will be able to revoke an attorney’s appointment without revoking the EPA if a successor attorney is appointed.  The amendment will clarify that an EPA appointing more than one attorney with several or joint-and-several authority will only cease to have effect when the last remaining attorney’s appointment is revoked by the donor or otherwise ceases to have effect.

If you would like further information please contact Amanda Hockley on 07 958 7451.

Healthy Rivers – The implications of cleaning up the Waikato River

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Introduction

The purpose of the proposed plan change is to improve the water quality in the Waikato and Waipa rivers over an 80 year time frame so that both rivers are swimmable and safe for food collection along their entire lengths.  The proposed plan change has had two years of closed door development and was notified to the public on 22 October 2016.  The Waikato Regional Council is open for submissions;  submissions close at 5pm on 8 March 2017.  If the change is approved, then all rules will be back dated to the date of notification.

Catchment and the basics of the rules

Healthy Rivers encompasses the Upper and Lower Waikato River catchments and the Waipa river catchment.  Sub-catchments within the area have been assigned a priority ranking to determine the dates by which the properties in the sub-catchments need to be on board.

Rules 1 and 2 are permitted activities which allow properties with low risk factors to continue to operate but must be registered with the Waikato Regional Council by the date specified by that property’s sub-catchment priority date.  Rule 3 is for properties which do not fit under Rules 1 or 2 but are still a permitted activity.  Activities under Rule 3 must be registered to a Certified Industry Scheme and have a Farm Environment Plan.  Rule 4 is a controlled activity and all properties under this rule must have a Farm Environment Plan and a Nitrogen Reference Point.  Commercial vegetable production will now be a controlled activity under Rule 5 and all properties under this rule must have a Farm Environment Plan.  Rule 6 covers all farming activities that are not covered by Rules 1-5 and is a restricted discretionary activity.  Rule 7 is for non-complying activities and land use changes (Figure 1) and will therefore require consent.

Farm Environment Plans (FEP)

Schedule 1 of the plan changes sets out the requirements for a FEP and a FEP must be certified by a Certified Farm Environment Planner.  Variations of FEPs have already been established, like Fonterra’s Sustainable Milk Plans or the Nutrient Management Plans which are included in most Federated Farmers leases.  All properties that come under Rules 3-6 must have a FEP in place by their priority dates.

An FEP should include the identification and assessment of risks to the environment on the farm and the actions that will be taken to mitigate the environmental impacts.  In the long run, implementing a FEP may yield business improvements due, for example, to improved sustainability and environmental awareness.  The FEP might also include a long term maintenance plan and on-farm development plan.

The FEP that is required under the Proposed Plan Change 1 must include:

  • Identification of areas of concern, including critical source areas for sediment and nutrient loss, erosion and effluent;
  • Assessment of the management practices for nutrients, pasture, cropping and stock and then set out improvement options;
  • A spatial risk map and a nutrient budget;
  • A description of the actions that will be taken to mitigate the identified risks;
  • A description of actions and time frames to ensure that the diffuse discharge of nitrogen from the property does not increase beyond the property’s Nitrogen Reference Point – using a five year rolling average annual nitrogen loss;
  • Further requirements are outlined in Schedule 1 of the plan for FEPs for commercial vegetable production.
Certified Industry Scheme (CIS)

The purpose of Rule 3 being a permitted activity, coupled with the requirement that both a FEP and CIS are in place, is to allow farmers to continue their farm activities and to give some flexibility in the actions they take to mitigate the environmental impact of the farm activities.  The CIS is designed for the farmer to be able to carry out their permitted activity while still being under the same level of scrutiny as would be applicable under a resource consent.

Schedule 2 of the plan change sets out the requirements for a CIS.  A CIS will be a more administrative scheme than an FEP.  There are currently no restrictions on who can develop and implement a CIS, but they must all be approved by Waikato Regional Council.

Changes to rules for harvest operations

Forestry harvests now need to notify Waikato Regional Council at least 20 days prior to commencing harvest operations within the Waikato and Waipa catchments.  There must also be a documented harvest plan which includes a harvest plan map and a description of the controls that are in place to manage the harvest and risk to water bodies.

Practical implications of the Healthy Rivers plan change

The biggest implication of the proposed plan change is the financial burden that it will place on farmers and the region.  A case study undertaken by Federated Farmers and Fonterra showed that on-farm costs for an FEP and associated compliance costs could range from $1,000 to $350,000, with some farms in the study incurring annual costs as well.

The cost of the Nitrogen Reference Point (NRP), as calculated by Overseer (or other approved model) will also have an impact on how farms and other activities are run.  For activities requiring a NRP under the proposed change the higher NRP of the reference period of either the 2014/2015 season or the 2015/2016 season will be used and for commercial vegetable growers the period from 1 July 2006 to 30 June 2016 will be used.  This may have the potential to severely limit the future production of land as the dairy down turn greatly affected the 2015/2016 season.

As a short term implication of the plan, the decreased opportunities for land use changes could potentially impact the value of some land and the terms of future sales or purchases.  While the plan change is still in its initial stages, it is important to keep the practical implications and rules in mind when considering selling or buying land in the Waikato or Waipa catchments.

Leases, sharemilking agreements and other farm contracts will also be affected due to the requirement that some farms have an FEP or be part of a CIS.  This will need to be considered when entering a new agreement or renewing an old one.

Dale is a Managing Associate in our Commercial Team and can be contacted on 07 958 7428.

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