au_common_admin, Author at McCaw Lewis

Sick Leave Entitlements – The Basics, “Sickies” and Medical Incapacity – Frequently Asked Questions

Posted on July 21, 2023March 19, 2026 by au_common_admin

Employers need to be knowledgeable around sick leave entitlements and how to minimise the impacts of staff absences on the business. Staff absences due to illness increase at different times for a variety of reasons, most commonly during the winter months. This article covers employer’s obligations and answers some frequently asked questions from employers.

Employer obligations

After six months of service, employees are entitled to 10 days sick leave per year. Employees can accumulate their sick leave to 20 days, or more if the employer allows. Employees are entitled to paid sick leave if they are sick or injured, or their spouse/partner/dependant is sick or injured. A dependant is someone who regularly depends on the employee for care, and therefore it makes sense that the employee needs to take leave to look after them when they are sick (e.g. a child).

If an employee is sick, an employer should encourage them to stay home. This is important for both the business, your affected employee and your other employees. Your sick employee will recover more quickly and their absence/recovery will help prevent illness amongst your other employees. You will generally find that your business will be more efficient when sick leave is properly taken, than if your employee continued to work through their illness.

Can my employee just work from home instead?

Even if working from home is an option in your line of work, we recommend encouraging your employees not to simply “work from home” if they are sick. As a starting point, they should take time to rest and recover.

Of course, there will be exceptions to this from time to time, but employers should keep health and wellbeing front of mind. A good example of when this might work well for all parties is when the employee has taken sick leave for a few days, has effectively recovered but seems to have a lingering cough that does not bother the employee, but is distracting to others in the office.

What if my employee runs out of sick leave?

As an employer, there are several ways you can support your employee if they exhaust their sick leave entitlement, including:

Providing additional sick leave
Allowing them to take unpaid sick leave
Allowing them to take sick leave in advance
Allowing them to take leave without pay

We strongly advise against declining your employee’s leave if they have exhausted their sick leave entitlements. Requiring an employee to come to work when they are sick or injured risks endangering the health and safety of the affected employee and those around them.

Can I dismiss an employee if I believe they are using their sick leave improperly?

If you believe your employee is misusing their sick leave and that their illness is not genuine, your options are:

Request a medical certificate for their absences
Have an informal discussion to try and resolve the issue
Commence a formal disciplinary process, if you have sufficient evidence

Whichever option you choose, we recommend treading carefully, having considered all the possibilities. If you are making an allegation of dishonesty in relation to sick leave, clear evidence is required. It is also not an employer’s place to determine how their employees should be recovering from illness – clear evidence is required from an employee undertaking an activity so inconsistent with recovery that the illness can be questioned. Further, a fair and reasonable process must be carried out before any decisions are made regarding disciplinary action. Such a process includes consulting with the employee, and we recommend reaching out to your lawyer to discuss this before taking any steps.

Can I dismiss an employee if they are genuinely sick, but their frequent absences are affecting my business?

While there is an obligation to act in good faith towards employees, an employer cannot be expected to infinitely hold open an employee’s job if they are unable to fulfill their role due to illness.

In time, an employer may have no other option financially but to take steps towards terminating the employee for medical incapacity. This process should never be approached lightly and significant care must be taken – this will be a difficult time for your employee.

Procedurally, check the employment agreement for the process regarding medical incapacity, and reach out to your lawyer to minimise risk before carrying out the process. The process for medical incapacity is complex at best, notwithstanding the emotional challenges this presents to your employee, and likely you as employer. The process entails conducting a full and fair investigation into the employee’s medical state, including their current state, their prognosis and expected timeframes for full return to work.

How many sick days do part-time employees get?

Part time employees are still entitled to 10 days sick leave once they have worked for you for six months. Regardless of whether they only work one day or four days per week – sick leave entitlements are not pro-rated.

How many sick days do casual employees get?

Casual employees are entitled to sick and bereavement leave after six months of working an average of 10 hours per week – comprised of at least one hour per week or 40 hours every month. If you have a casual employee qualifying for sick leave, your casual employee may be considered “permanent” legally. We recommend reaching out to your lawyer for clarification.

Going forward

Overall, the best advice we can give is to look after your employees. If your employee is genuinely ill, consider what you can do to support and minimise the impacts on them.

If you believe your employee is using their sick leave illegitimately, or you are unfortunately at the stage where a process for medical incapacity may be necessary, we recommend reaching out to our team to discuss options and assist you moving forward. Any attempt to address matters relating to sick leave must be approached carefully and through a fair and reasonable process.

Employment law assistance

Our Workplace Law Team are able to assist with all employment processes and any other bespoke employment queries that you may have. No query is too big or small.

Chantelle is a Senior Solicitor in our Workplace Law Team and can be contacted on 07 958 7473.

Is My KiwiSaver Relationship Property?

Posted on June 19, 2023March 19, 2026 by au_common_admin

Following a relationship breakdown, the term “relationship property” becomes all important. But what exactly does relationship property include? In a series of articles, we will be considering this question in respect of the most common items of property that people hold in their relationships, starting with KiwiSaver.

After the family home, KiwiSaver can be one of the major assets of a relationship. So, is KiwiSaver relationship property? As for most property, the answer is going to be “it depends”.

When is KiwiSaver Separate Property?

We will first address when KiwiSaver is not relationship property. That is, when it is considered to be the separate property of one of the parties. This will cover before, during and after the relationship.

It is not uncommon for one or both of the parties to enter into a relationship with a significant balance in a KiwiSaver fund. This is particularly so in subsequent relationships.

The starting point for the KiwiSaver balance that you enter your relationship with is that it is your separate property. However, if you were to subsequently use your KiwiSaver for the purchase of your first home, which you then live in with your partner, it is most likely that this contribution will become relationship property. Likewise, if you make a KiwiSaver withdrawal due to hardship and apply it to the relationship, then this too will be considered relationship property.

During your relationship you may make contributions to your KiwiSaver from separate property. If these contributions are in fact made from separate property (for example if you received an inheritance and invested that in your KiwiSaver fund), then these contributions will remain your separate property, provided your KiwiSaver is not subsequently used as described in the preceding paragraph.

Following separation, any contributions that you make to your KiwiSaver fund from your separate income or from your separate property, will remain your separate property.

When is KiwiSaver Relationship Property?

Any contributions that you make to your KiwiSaver during your relationship, that are not made from separate property, are most likely going to be relationship property.

The majority of KiwiSaver contributions come directly from employment, rather than voluntary contributions from other sources. Considering the income earned during a relationship is usually relationship property, in most cases, a KiwiSaver balance accumulated during a relationship is considered relationship property.

If My KiwiSaver is Relationship Property What Happens to it if My Relationship Ends?

The starting point for any part of your KiwiSaver that is relationship property is that it is divided in half, as with all your other relationship property.

Practically speaking however this does not necessarily mean that you must access the funds in your KiwiSaver.

In circumstances where each party has a KiwiSaver fund then they may each keep their respective funds, with an adjustment payment being made from other relationship property to ensure overall equality, if the KiwiSaver balances are not equal. This approach can also be used where only one party has KiwiSaver. This is of course dependent on the availability of other relationship property to make an adjustment payment from.

If there is no ability to make an adjustment payment, then the Court can make an order for KiwiSaver funds to be released.

How Can I Protect My KiwiSaver?

One way to protect your KiwiSaver is by entering into a contracting out agreement with your partner pursuant to the Property (Relationships) Act 1976, often referred to as a “pre-nup” or “pre-nuptial agreement”. This will specify whether any pre-relationship balances remain separate, and how on-going contributions will be treated upon separation.

The experienced team at McCaw Lewis can help you navigate any aspect of your relationship property matters and answer any questions you may have.

Zane is an Associate in our Dispute Resolution Team, specialising in Relationship Property, and can be contacted on 07 958 7431.

Where There is a Will in the Way – An Overview of Estate Claims and Challenging Wills

Posted on June 8, 2023March 19, 2026 by au_common_admin

The loss of a family member or an acquaintance can be one of the most difficult situations to face. A surprise as to how the deceased has left their affairs, can often compound the stress and emotions being experienced.

While the law assumes that a validly executed Will reflects the testator’s (willmaker’s) intentions, there are a number of legal frameworks to protect both the testator and those left behind. When working with a client who is faced with an unexpected situation under a Will, we consider each of these in assessing whether or not the Will could or should be challenged.

Capacity – Did they know what they were doing?

Testamentary capacity has both a medical and a legal element to it. In general terms, the Court must be satisfied that the testator understood what they were doing, and the consequences of it.

In assessing such a claim, it will be important to obtain full medical records and to take appropriate expert advice as to any impairments the testator may have had at the point of executing the Will.

Undue Influence – Were they pressured?

A testator can be found to have been subject to undue influence, if they were pressured or coerced into signing a Will contrary to what they wanted.

A duress situation is more likely to occur when a Will is not executed with the assistance of a lawyer and/or is not witnessed by a lawyer, though pressure can also have been exerted when a lawyer has been involved.

Duress is a high threshold, and a Court needs to be satisfied that the Will does not reflect the testator’s real wishes and own free will.

If there are issues of capacity, there is also greater risk of duress being imposed on a testator.

Testamentary Promise – Why didn’t they do what they said they said they would?

A testamentary promise claim addresses a situation when someone has provided services/assistance to the deceased based on an express or implied promise that they would be provided for in the Will.

Such claims often arise from people outside of family, as normal familial duties will seldom meet the testamentary promise test.

When assessing what reasonable compensation is for the service provided by the claimant, the Court will take into account a range of factors.

Family Protection Act – But what about family?

Family Protection Act claims are the most common basis to challenge a Will. Most immediate family members have standing to bring such a claim, which will be on the basis that the testator has failed to meet the moral duty owed to them.

While there is an argument that someone should be able to leave their estate to whoever they wish, the law has a framework to ensure the deceased has considered the moral duties which the law imposes.

Where a moral duty has been breached, a Court can only amend the Will to the extent necessary to remedy the breach. Doing so requires the Court to take into account factors including the financial needs of the claimant, the size of the estate and competing moral duties.

What Happens if a Claim is Successful?

Different claims can result in different outcomes. If a Court finds that there was a lack of capacity or duress, the outcome is that the Will in question can be declared void. This could result in an earlier valid Will coming into effect, or if there is no other valid Will, default intestate distributions will be made.

Conversely, in the case of a successful Family Protection Act claim or testamentary promises claim, the position under the Will will only be varied to the extent necessary to address the problem.

Summary

Managing estate claims requires careful assessment of the options and the wider considerations such as family dynamics and relationships. There are statutory timeframes which apply so it is important that concerns are raised as soon as possible.

In nearly all situations, a negotiated outcome will minimise the stress and long-term damage which can result from litigating such matters.

Daniel leads our Dispute Resolution Team, specialising in Trust and Estate Disputes, and can be contacted on 07 958 7477.

Māori Land Court’s jurisdiction over PSGE Trusts to be decided on a case-by-case basis

Posted on May 25, 2023March 19, 2026 by au_common_admin

The Court of Appeal has overturned a decision that the Māori Land Court has jurisdiction to hear claims against Post-Settlement Governance Entities (PSGEs). The Court of Appeal ruled on two issues before it. Firstly, that the PSGE trustees did not own the land for the purposes of the definition of General land owned by Māori and, secondly, that the Trust in question was not constituted in respect of General land owned by Māori or Māori freehold land.

The decision arises out of proceedings in the Māori Land Court and Māori Appellate Court involving an application by Te Kaunihera Kaumātua o Tūhoe for orders in relation to the appointment of trustees and other administration matters concerning Tūhoe – Te Uru Taumatua (TUT), the PSGE for Ngāi Tūhoe.

The decision was appealed by the trustees. On appeal, the Māori Appellate Court upheld its decision.

In the Court of Appeal, the Court found that the General land held by TUT is not General Land owned by Māori, which would bring it within the Māori Land Court’s jurisdiction under s 236 of Te Ture Whenua Māori Act 1993. This was on the basis that TUT is a discretionary trust and “beneficiaries of a discretionary trust have no interest in possession in the assets of the trust”, and TUT’s discretionary beneficiaries “do not, individually or collectively, hold any vested beneficial interest in the land that forms part of the Trust Fund”. The Court went on to state “General land held by the Trust is not General land owned by Māori for the purposes of Te Ture Whenua Māori Act, because the estate in fee simple in that land is not beneficially owned by the Trust’s current discretionary beneficiaries.”

On the related issue of whether TUT was constituted in respect of General land owned by Māori, the Court of Appeal found that the focus should be on the time when the Trust was established. The question is whether one of the original purposes of establishing the Trust was to provide for the holding and administration of one or more identified parcels of General land owned by Māori. In this case, at the time the Trust was established, it was contemplated that it would hold land through a Treaty settlement, but the Trust was established for very broad purposes, including advancing the mana motuhake of Tūhoe and holding a wide range of assets for the long-term benefit of current and future Tūhoe iwi members. It was not established to hold one or more identified parcels of land on trust for the benefit of the beneficial owners of that land.

As well as this, the Court also found the Trust was not constituted in respect of the small number of parcels of Māori freehold land, as the Trust was not set up to hold those parcels of land.

Whether the Māori Land Court will have the jurisdiction over PSGEs/Trusts remains a question to be determined on a case-by-case basis, having regard to the Trust purpose and assets.

Kylee and Tiana are in our Kahurangi Team. Kylee can be contacted on 07 958 7424 and Tiana can be contacted on 07 958 9700.

Reasonable Recklessness – A Guide to “Reasonable Care Conditions”

Posted on April 17, 2023March 19, 2026 by au_common_admin

If you asked someone why they have insurance in the first place, the most common reaction is peace of mind. However, a lack of caution can mean a breach of your insurance, with insurance companies commonly citing a “failure to take reasonable precautions” as a reason for the policy being breached, with cover being declined as a consequence.

What is “reasonable”, and moreover, what would count as a “reasonable precaution” is relatively wide, but Courts have interpreted the word “reasonable” as actually meaning “reckless” – with “reckless precaution” being a significantly higher threshold. This article looks at the differences between “reasonable” and “reckless” precautions, and how this might affect your own insurance cover, should you need it.

The requirement to take reasonable precautions is usually articulated by clauses/terms in the relevant policy. These clauses are collectively often referred to as “reasonable care conditions”. The exact wording in policies can vary, but generally they state some sort of requirement that an insured takes “all reasonable steps to prevent loss or damage for item/property X”. In other words, the insured must avoid being negligent. A plain reading of these reasonable care conditions mean you are not covered for careless actions – for instance, accidentally leaving your phone or wallet in a taxi – because this was due to your own negligence, as opposed to an event outside of your control.

Somewhat fortunately, the Courts read these clauses through a different, stricter lens, starting with the 1967 English Court of Appeal. The Court in Fraser v B N Furman (Productions) Limited found that such clauses were completely at odds with one of the main principles of insurance – that being, to protect against acts of negligence. Diplock LJ found that the standard should instead be assessing on if the insured had knowingly taken risks they normally wouldn’t, knowing they would be covered – to go back to our example, suppose our insured person decided to lose their phone deliberately in a taxi, knowing they would then get a pay-out from their insurer. In this instance, the insurer could decline cover, citing an abuse of the insurance policy. This distinction between an insured’s negligence, and an insured’s recklessness, is the standard that has now been adopted in New Zealand.

There is still a continuing debate in New Zealand on the differences between subjective (i.e. the person’s own viewpoint) and objective (i.e. a reasonable person’s viewpoint) recklessness, and which “type” of recklessness should be required. However, it is clear that recklessness, not just a lack of reasonable care, is the standard required to breach a reasonable care condition.

In Roberts v State Insurance General Manager [1974] 2 NZLR 312 (NZSC), it was argued that an insured motorcycle owner was reckless for leaving his broken down motorcycle on the side of the road, though he was planning to come back and collect it. The motorcycle was subsequently stolen.

While the insurance company accepted that the required standard was recklessness, they argued that the insured could have taken a number of alternative steps, such as pushing the motorcycle along the road, or asking local authorities for help, in order to reduce the risk of theft. In other words, the insured had not taken all reasonable steps under the insurance policy, to safeguard the motorcycle from loss.

The Court rejected this argument. In applying the test of Fraser outlined by Diplock LJ, the Court noted the insured had not contemplated that his motorcycle could be stolen, and had actually made arrangements to collect the motorcycle (albeit, the day after it had broken down). In summing up the decision, McMullin J held:

He [the insured] neither appreciated the risk that his motor cycle might be stolen and chose to ignore it nor did he act in a grossly negligent way. His claim for indemnity ought to have succeeded.

Reasonable care conditions are a part of nearly all insurance contracts, and it is important to understand how those clauses are interpreted, should the policy be required. This is even more important when we consider the recent extreme weather events in New Zealand, which have had far reaching, and often devastating consequences.

Conclusion

Making an insurance claim can be a stressful and time consuming process at the best of times. To give yourself the best chance of a successful claim, it is important to consider the following:

Were you aware of the risks, prior to the incident? If so, at what time were you made aware of the risks?
Would a “reasonable person” in your situation know those risks?
Did you, being aware of those risks, proceed anyway?
When you proceeded, did you believe those risks had been mitigated?
What alternatives (if any) were considered, and why were they not taken?

If you are considering making a claim, we can assist you with both the preparation and the claim process itself.

Andrew is a Solicitor in our Dispute Resolution Team and can be contacted on 07 958 7447.

Employment Agreements – Ensuring they cover the basics

Posted on April 13, 2023March 19, 2026 by au_common_admin

An employment agreement is a fundamental document providing protection and clarity for both, an employer and employee. It is crucial that these agreements encapsulate the important basics of any relationship.

This article sets out the different types of employment agreements, and some of the important terms all employers need to know about.

There are three main types of employment agreements, these include:

Permanent full-time or part-time
Casual
Fixed term

The basics, what are they?

From a legal perspective, there are certain clauses that must be incorporated into an individual employment agreement. Additionally, there are clauses that can be added which help to ensure that each agreement is fit for purpose and aligns with the differing needs of the parties.

The law requires that an employment agreement contains the following:

The names of the parties
A description of the work that will be carried out by the employee, it is important that there is a clear expectation of the employee’s responsibilities are
Place of work
The agreed hours that the employee is expected to work, including start and end times, and specific days
The wage or salary rate (compliant with minimum wage or higher) with an indication of how and when this will be paid
How to resolve employment relationship issues, including that personal grievances must be raised within 90 days
Rest break times
That the employee will get paid time and a half for working on a public holiday
If applicable, an employment protection provision. This is necessary in cases where the employer’s business is sold/transferred, or if the employee’s work is contracted out
Any other matters that are agreed on between parties, including trial periods, probationary arrangements or availability. A 90-day trial can only be included for employers with 19 or less employees and must be in a signed agreement before employment commences
Nature of the employment

For many, employment agreements are seen as a “tick box” document that should be signed and put in a folder, never to be looked at again. The best employment agreements embody the values of the employer and set a framework for a positive relationship, covering off all matters that need to be covered in the tricky times.

The Workplace Law team at McCaw Lewis are available to assist with drafting, reviewing, or answering any queries that you may have around employment agreements. Get in touch now!

Tazmyn is a Law Clerk in our Workplace Team and can be contacted on tazmyn.prendiville-stowers@mccawlewis.co.nz.

As a business owner/employer, how can I navigate my duties to employees during a recession?

Posted on April 11, 2023March 19, 2026 by au_common_admin

While we are technically now in a recession, it’s good practice for employers to consider how their business may be impacted and what that means for them and their employees. This article covers:

How good employers act in times of recession
Employer’s obligations to employees
Pre-emptive strategies to minimise the risk of employment litigation
What restructuring might look like

Employer Obligations

As a minimum, it’s important to remember that basic employer obligations underpin all dealings with employees, even in times of recession and economic downturn. These obligations apply regardless of the health of your business, and include but are not limited to:

Duty to act in good faith
Duty to act fairly and follow proper employment processes
Duty to consult with your employees and keep them “in the loop”

Communication, communication, communication

A practical first step for any business that may feel the crunch of a recession is to consider which business expenses can be scaled back.

If the business is looking to scale back, this doesn’t necessarily mean a restructure. For employees, it may look like amendments to ways of working e.g. more working from home and downsizing the office, meaning a saving on overheads. Other initiatives could be to restrict overtime, reduce any recruitment and outsource operations where possible. We recommend keeping employees involved and seeking their input – they may have some great ideas here. If your employees know that costs are being cut, yet there is no prospect of a restructure at this point, it would be helpful to ensure that your employees know it. They may be feeling uncertain, and some reassurance will go a long way. Further, if your employees are kept in the loop, this can help to speed up a restructure process later, (if it gets to that).

Any proposed amendments to an employee’s role, remuneration, or hours of work will require consultation with your affected employees and their written agreement. If this cannot be obtained, we recommend reaching out to one of our lawyers for guidance.

Restructuring

If scaling back expenses requires a restructure of the business, being aware of the processes and your employer obligations under the Employment Relations Act 2000 is key, and it is always best to speak with a lawyer as a first step.

In brief, any restructure and/ or any subsequent redundancy of employees needs to follow a strict process, with consultation with affected employees throughout. Restructuring must be for genuine business reasons, and must be because the role is no longer required – it cannot be specific to a person. We discuss this here, however in any restructure, it’s important to communicate as openly as possible with affected employees and get the process right. In these circumstances, we strongly recommend taking legal advice to minimise the risk of employment claims.

Going Forward

A recession may not be all bad for your business; there is unique opportunity to reassess the business expenditure as a whole – is the workforce as streamlined as it could be? Are your other contracts and business expenses really working for the business? Being proactive and taking minor steps before the effects of a recession are felt can really pay off, and can incentivise employees if they feel they have some influence.

This is also a great time to ensure that all employment agreements are up to date and reflective of recent developments in employment law. This is particularly true in times of economic hardship – it is integral that employment agreements can be relied upon if needed.

Overall, the best advice we can give is to look after your employees. If you do need to restructure the business, consider what you can do to support your employees and minimise impacts on them. This not only retains morale among the remaining employees, but also minimises risk for you of personal grievance claims for unjustified dismissal if a restructure is necessary.

Employment Law Assistance

Our Workplace Law Team are able to assist with employment matters relating to restructuring, redundancies and any other bespoke employment queries that you may have. No query is too big or small.

Chantelle is a Senior Solicitor in our Workplace Law Team. She can be contacted on 07 958 7473.

Breach of Agreement Made at Employment Mediation

Posted on March 2, 2023March 19, 2026 by au_common_admin

When it comes to entering into Records of Settlement with former employees, there is often some agreement around what is or is not to be said. This might include whether written references are to be given or perhaps agreement not to provide any reference or comment at all.

The Employment Relations Authority dealt with one of these situations in Timothy Levchenko-Scott v Presbyterian Support Central Charitable Trust.[1] Here the Authority dealt with an issue arising from an agreed Record of Settlement made in a mediation.

In the Record of Settlement, Presbyterian Support Central Charitable Trust (PSC) and Timothy Levchenko-Scott agreed that “neither will disparage nor speak ill of the other, non-disparagement extending to all forms of social media”. It also recorded that the employer would “provide a written reference to Tim on PSC letterhead…the text of which is contained in the addendum to this settlement agreement. If contacted by a third party, PSC will restrict its comments to those which are consistent with the text of the reference”.

Unfortunately, when Levchenko-Scott went looking for work, three potential employers withdrew offers of employment after reference-checking him. They said that when PSC was asked whether they would employ him again, they answered “no”, and said he failed to align with the organisation’s values.

The Authority agreed with Levchenko-Scott that the comments made by PSC officials were outside the scope of the agreed text and were a breach of the Record of Settlement. PSC was restricted to the agreed text discussed. That meant that PSC could not say why they would not rehire Levchenko-Scott or to discuss his alignment with the organisation’s values. The reference comments went too far.

For employers in this situation, there are a few lessons that can be taken from this decision:

Think about what type of reference you are willing to give – will it be written only or will it be supported by a verbal reference? Remember that, unless agreed, there is no requirement for a reference. You might wish to keep clear of providing any reference so that you do not get yourself into a tricky position when providing a reference.
Be clear on what is being agreed upon in a wider sense – what information is going to be included in any reference that is provided? Be sure to agree on any factual statements around the reason for an employee’s exit. Know what you are agreeing to in terms of non-disparaging remarks as well.
Be realistic – while not all employer-employee relationships end on good terms, it is essential to keep acting in good faith and uphold your own reputation and mana. As an employer, try not put yourself in a position where you might jeopardise that by agreeing to give references that you would rather not!

Cree is a Solicitor in our Workplace Law Team. If you would like some assistance with employment workplace matters, please contact our Workplace Law Team.

[1] Timothy Levchenko-Scott v Presbyterian Support Central Charitable Trust [2020] NZERA 452.

A Step Towards a New Resource Management System: Introducing the Natural and Built Environment Bill and Spatial Planning Bill

Posted on December 19, 2022March 19, 2026 by au_common_admin

The Resource Management Act 1991 (the RMA) has long operated as Aotearoa’s predominant environmental legislation – with the primary objective to promote and safeguard sustainable management of our natural and physical resources. However, the current system has brought to light a number of flaws that now require reform. The Government has introduced the Natural and Built Environment Bill and the Spatial Planning Bill – which together make up two of the three components that will replace the RMA and ultimately act as our new resource management system. The Climate Adaption Bill is the third and last component of our new system which will be introduced in the upcoming year.

Key elements of reform

The purpose of the new resource management system is to:

Administer an “intergenerational test” to all Aotearoa people. This concept is adopted from Te Oranga o te Taiao, a Te Ao Māori concept that emphasises the interconnectedness of all environmental factors as well as the connection between the health of the natural environment and its ability to sustain life;
Shift the focus from managing adverse effects to enhancing the promotion of positive outcomes;
Provide further recognition of the Te Tiriti o Waitangi principles;
Create a new framework with specific provisions for freshwater in the natural and built environments plans; and
Implement consolidation of new duties within the National Planning Framework.

In addition, the Spatial Planning Bill proposes long term and strategic spatial planning throughout Aotearoa through the creation of “Region Spatial Strategies”. These strategies will offer the vision and objectives for region growth and change over a 30-year timeframe and will detail the needs and aspirations of regions, including areas that require high level of protection or restoration.

Have your say

Both the Natural and Built Environment and Spatial Planning Bills are open for submissions to the select committee. The closing date for submissions is Monday, 30 January 2023.

Subsidiary Structuring for PSGEs – Custodian Trustees

Posted on December 12, 2022March 18, 2026 by au_common_admin

As part of their settlement process, iwi are required to nominate a “post settlement governance entity”, or PSGE, to hold and manage the assets received on settlement. For various reasons, these PSGEs are often set up as private trusts, made up of several individual trustees.

Technically speaking, a private trust like a PSGE is not a standalone legal entity, but rather an organised “relationship” between the trustees and beneficiaries. This means that all of the assets and obligations of a PSGE are legally held by the trustees in their individual names, but for the benefit of the trust’s beneficiaries.

This can cause serious difficulties when trustees of a PSGE resign or are replaced by elections; ownership records like property titles and share registers need to be updated every time there is a change in trustees, but for many reasons these updates are often neglected. Often when the trust then goes to deal with that property or those shares, they can get a shock to realise some or even all of the names on the ownership record are of former trustees who are no longer in office.

Purpose of a Custodian Trustee

To deal with this, many PSGE trusts establish a custodian trustee. This is a separate person or legal entity (for example a company) set up to hold and administer trust property on behalf of the trustees. A custodian trustee is effectively a “puppet”, which can only deal with trust property at the written direction of the trustees. Although the individual trustees may change over time, the custodian trustee does not.

Although the custodian trustee is the legal owner of the assets (i.e. the name on the title or ownership instrument), it is not entitled to any benefit from those assets. All of the benefit of those assets still sits with the PSGE trust, and ultimately with the iwi beneficiaries.

Removing trust assets from the trustees’ personal names also mitigates the risk of any individual trustee misusing assets or treating them as their personal property.

Liability

While the trustees have a number of duties, both at law and under their trust deed, a custodian trustee will not be subject to those duties and does not otherwise take on the liability of a trustee for the administration of the trust.

However that protection only lasts as long as the custodian trustee is acting in compliance with the terms of its appointment and in accordance with the directions of the trustees. If the custodian trustee fails to act in accordance with the trustees’ directions, it will be liable to the trustees for that failure under s67(3) of the Trusts Act 2019.

Structure

Often a custodian trustee will be established as a company, so the trustees can be registered as directors and shareholders. This makes the link to the trust very clear, and ensures that the trustees are still the ones in charge of the assets. When the trustees change, it is much easier to change the directors and shareholders of the custodian trustee company than to update land titles, share registers or other ownership records.

If a PSGE’s trust deed allows the appointment of a custodian trustee (which most trust deeds will), the relationship between the PSGE trust and the custodian should be formalised by way of deed. This document would normally set out the custodian trustee’s limitation of liability expressly, and may include an indemnity for the custodian when acting in accordance with the directions of the trustees. If a trust deed does not include an express clause authorising the appointment of a custodian trustee, it might be possible to vary the deed to include this.

Disadvantages

The key disadvantage to a custodian trustee is one of perception – the trust assets are legally transferred out of the personal control of the trustees to a separate entity, and there is not always a great deal of understanding about what this means. However this can be mitigated by proactive and clear communication with iwi members, explaining the role of the custodian and emphasising that assets are still the property of the trust and must be managed in accordance with the direction of the elected trustees.

Te Ture Whenua Maori

Custodian trustees may also be appointed in relation to trusts constituted under Part 12 of Te Ture Whenua Maori Act 1993, either as permitted by a trust order or through an application to the Maori Land Court. Specific provisions apply to custodians appointed in this way, including how decisions can be made by trustees and notified to a custodian, the custodian’s rights and obligations and the custodian’s right to remuneration.

Custodians

Custodian trustees can be a simple and cost-effective solution to the issue of trustee resignations and rotations, removing the need for regular title changes for trust assets, protecting assets from potential misuse by an unscrupulous trustee, and avoiding headaches when dealing with outdated ownership records. No beneficial ownership rights are lost, and liability for proper management remains with the trustees. The need for written instructions also ensures that trustees’ decisions must be recorded properly. Where a company is the structure of choice, establishment can be done quickly and relatively inexpensively. While there can be some confusion among trustees or iwi about the role, there are very few downsides to the appointment of a custodian trustee.

Jessica Middleton is a Senior Associate in our Commercial Team and can be contacted on 07 958 7436.

Author: au_common_admin