Identity Verification Bill ('the Bill') had cross-party support for its second
reading on 29 August 2012. The stated purpose of the Bill is to "facilitate
secure interactions" between government agencies and individuals, by enabling
people using the Internet to have a secure electronic identity to use when
dealing with all government agencies.
Under the Bill, an individual will be able to apply for an Electronic Identity
Credential ('Credential'), which is an electronic record stored by the newly
created Electronic Identity Verification Service ('the Service'). The Service
will be managed by the Department of Internal Affairs, and an individual's
permission must be granted each time an agency wishes to access their
The process is designed to save each agency time and money because they can
rely on the Service rather than having to set up and administer their own
identity verification process. Hopefully the introduction of Credentials will
also improve an individual's ability to deal with government agencies by
utilising a uniform identification system.
Applying for and using a Credential is optional. Each Credential contains
personal information that can be accessed by a government agency when they
need to verify the identity of an individual. A Credential can contain the
following information about the person: full name (including past names or
other names used), gender, date of birth and place of birth.
A photograph of the person does not form a part of the Credential. However, a
photograph may be required in the application process. Other identity related
information may be stored on the Service database, but only the information
contained within a Credential
is expected to be released to
government agencies. Other identifying information held, including any
photograph, will only be accessible in limited circumstances.
Clearly any proposal for the Central Government to store personal information,
potentially available for access by its agencies and departments, will be
controversial as "Big Brother" concerns spring to mind. To avoid any such
concerns, the Bill puts significant controls on how the information can be
used. It is telling that the Privacy Commissioner made submissions that were
substantially in favour of the Bill to the Select Committee.
Inside this edition
Identity Verification Bill
Commercial Leases - Rights of Renewal
Personal Property Securities Register and Terms of Trade
Building Report Clause 9.3
- Use and Consents
Litigants - London 2012
The principles of the Bill allow
complete discretion for people to choose whether or not to have a Credential
issued, and even whether to use a Credential once it has been issued.
Therefore government agencies must ensure that people without a Credential
still have access to their services. The Credential is to be used for
identification purposes, and may only be used by government agencies for the
purpose of verifying identity. Information sharing between government
departments is proposed in a separate, and perhaps complementary bill, in
pursuit of the Government's objective of streamlining the public service
The Bill proposes to make it an offence for anyone to use information stored
in a Credential improperly. An individual can be sentenced with up to two
years in prison and/or a fine up to $50,000, while a corporation faces a fine
of up to $200,000. Anyone caught trying to use someone else's Credential, or
applying for a second Credential, faces a similar punishment.
under commercial leases seek to negotiate a shorter initial term with rights
to renew the lease in the future, rather than committing to a long term lease
at the outset. These rights are referred to as 'rights of renewal', and allow
the tenant some flexibility by giving them the right (subject to certain
conditions) to renew the lease for a further term or let the lease expire.
EXERCISING THE RIGHT
Generally a right of renewal is not exercised automatically. It is important
therefore that any tenant wanting to stay in the premises is aware of the need
to exercise the right of renewal, and to do so in advance. Continued
occupation of the premises after the expiry of the current term does not mean
the lease has been renewed. Although commercial leases vary, the widely used
Auckland District Law Society lease requires the tenant to give at least three
calendar months' notice of their intention to renew. This is usually done by
the tenant giving written notice to the landlord, in accordance with the terms
of the lease, that they wish to renew the lease. If notice has not been given
before the last three months of the term, the right to renew the lease may
lapse, as the period of notice is a term of the renewal.
The tenant's decision to give notice of the intention to renew the lease must
be carefully considered. It is a commitment to be responsible for all
obligations under the lease for a further term, often a number of years.
BREACH OF THE LEASE
Almost all leases will provide that a tenant cannot exercise their right of
renewal if they are in breach of the lease. Tenants must ensure that when they
give notice of their intention to renew the lease they are complying with all
their obligations under the lease, including any non-monetary obligations. A
tenant is advised to ensure they are aware of their obligations under the
lease in advance of renewing the lease.
A NEW LEASE
Where the lease is renewed pursuant to a right of renewal, it is deemed to be
a new lease, rather than an extension of the prior lease. The landlord is
entitled to require, as part of the renewal, that any guarantor of the
existing lease also guarantee the new lease. It is therefore recommended that
a landlord has the renewal formally documented, and signed by the guarantors
to record their ongoing obligations. Guarantors should also review all aspects
of the lease and think carefully prior to agreeing to this obligation.
WHEN THE LEASE IS NOT RENEWED
Provided that sufficient notice has been given, the tenant is not in breach
and is complying with any conditions of the renewal of lease, the landlord
must agree to a renewal of the lease. A tenant who has a right to renew the
lease, and that right has been refused by the landlord, may apply to the Court
for relief under the Property Law Act.
If you have missed the deadline for exercising a right of renewal, you wish to
renew the lease but are in breach, or you have been refused by the landlord,
contact your solicitor promptly. If relief from the Court is necessary, there
are time limits within which you must apply.
Since 2002, New
Zealand has had a universal register on which parties are able to register any
security taken over assets (other than land) called the Personal Property
Securities Register ('PPSR'). Security is rights in respect of an asset
granted to a creditor to support your obligations to them. These rights
commonly include the right to take ownership or control of the asset if you do
not meet your obligations.
register security (called a 'financing statement') for a small fee. The
financing statement identifies the debtor (the party giving security), the
secured party (creditor), and the collateral (the assets to which the security
The priority of competing security interests depends on when the security
interest was registered. Generally priority relates to the date of
registration, even if the underlying security agreement was completed much
earlier. If a financing statement is not registered, registered securities
take priority. Therefore prompt registration is key.
IMPACT ON TERMS OF TRADE
Before the PPSR, it was common for a supplier's 'Terms of Trade' to include a
clause recording that ownership of the goods remains with the seller until
payment for the goods is made in full (commonly known as a 'Romalpa clause').
However, the Terms of Trade alone will not protect against parties who have
registered security. To obtain priority over other registered creditors, a
financing statement must be registered on the PPSR.
CONSEQUENCES ON LIQUIDATION
When a business goes into liquidation, the assets of the business are realised
to repay as much of the debt as possible. Where there are competing creditors,
the order in which they receive their share of any proceeds is determined by
their 'priority'. Secured creditors have priority over unsecured creditors but
even amongst secured creditors there is a pecking order. A creditor with a
registered security interest takes priority over a creditor with unregistered
security. Furthermore, a creditor with an earlier registered interest takes
priority over a later one.
Since it is common for a bank to have a registered security
interest over a trading company's present and future property, a supplier of
goods or services on credit with an unregistered security interest takes a big
PURCHASE MONEY SECURITY INTERESTS
Fortunately, there is an exception to the normal priority rule. A Purchase
Money Security Interest ('PMSI') is possible when personal property is taken
as collateral to ensure the payment of the purchase price, and can apply to
Terms of Trade type situations. A PMSI can take priority over an earlier
In order to ensure the priority of a PMSI the supplier needs to ensure that:
the buyer has agreed in writing to the security interest, and
the security interest is registered within 10 days of the buyer
A supplier is not required to register a separate financing
statement every time it supplies goods, but rather can register a financing
statement to secure goods supplied from time to time on credit.
Financing statements expire after five years. Once they expire the original
registration date is lost, and with it priority is lost. Prior notice of a
pending expiry is not given by the PPSR. It is up to the secured party to
monitor their registered security interests to ensure they are renewed before
As apartments and townhouses become a preferred style of living
in the modern world, having a knowledge of unit owners' rights and obligations
under the Act is necessary. After the Bill is passed, all existing unit titles
and bodies corporate will have 15 months to bring themselves in line with the
provisions of the new Act.
Auckland District Law Society ('ADLS') updated their Agreement for Sale and
Purchase of Real Estate ('Agreement'). This Agreement is the most common
contract used for the sale and purchase of real estate throughout New Zealand.
Amendments included the introduction of a pre-prepared clause for the
purchaser's use when making the Agreement conditional upon a satisfactory
builder's report. This clause is included by indicating 'yes' on the front
page of the Agreement, similar to a LIM report condition.
Previously, specific building report clauses were frequently prepared and
inserted by the agent or purchaser's solicitor. These were contractual terms
recommended to a purchaser to benefit them and protect their interests. These
clauses were used by the purchaser to request that outstanding repairs and
maintenance be completed, or negotiate reductions in the price or in some
instances, cancel the agreement. The clauses varied but tended to either:
purchaser to cancel immediately (as adopted by the ADLS Agreement), or
set out a process
by which the vendor is given the option of remedying issues raised in the
building report, and only upon a refusal to do so, could a purchaser cancel.
THE NEW CLAUSE
The details of the building report condition are in clause 9.3 of the
Agreement. It records that the Agreement is conditional on the purchaser
obtaining a satisfactory building inspection report, with the purchaser to
advise within 10 working days if the building report is unsatisfactory.
Crucially, the clause contains the requirement that this report be "prepared
in good faith by a suitably-qualified building inspector in accordance with
accepted principles and methods".
The meaning of "suitably qualified building inspector" is vague, with a
builder or at least someone experienced in the building industry envisaged.
The ADLS have indicated that in principle this can include an ordinary
builder, provided the builder has experience in the particular type of
building that is being inspected.
It is in the
purchaser's best interest to obtain a thorough inspection and report from a
builder or specialised building inspection company that is experienced in
inspecting properties and has appropriate liability insurance in place. A
purchaser cancelling the agreement based upon a building report must, if
requested, immediately provide a copy of the report.
It is possible that purchasers who attempt to avoid agreements may find
themselves being challenged by vendors, as the clause requires an objective
assessment of the property. As yet it has not yet been established what issues
will be too insignificant to justify cancellation. Regardless of the
provisions of the clause, it may still be possible for parties to co-operate
and agree for any issues raised in a builders report to be remedied prior to
The new clause may not always meet your needs. A vendor of a building with
identified issues may want the option of undertaking the works prior to
settlement, to prevent the sale being cancelled once an inspection has been
obtained. It is always prudent to seek legal advice before signing an
Agreement, to explore alternative or additional provisions as necessary.
Having a lake or a river on a property does not mean that the
owner of the property is allowed to take whatever water they desire. Water is
a limited resource in New Zealand, and is managed by Regional Councils under
the Resource Management Act ('RMA').
Regional Councils produce environmental plans detailing controls for water
usage in their region. This includes determining when a person must apply for
Resource Consent to take water.
Dairy farming continues to develop throughout New Zealand and consequently
agricultural methods are becoming more water intensive. At the same time,
growing cities mean increased municipal water requirements. The combination of
these factors results in increased demand and competition for water. Some
catchment areas are now considered over-allocated, and with a focus on
sustainable water management, many Regional Councils are re-evaluating their
water allocation policies.
TAKING OF WATER
Certain rights to take water are granted by the RMA, including the taking of
water for 'reasonable domestic water needs', drinking water for stock
(provided that these activities have no adverse environmental effects) and for
the purposes of firefighting. Beyond these, a party may be required by their
Regional Council to apply for Resource Consent to take water.
Depending upon the Regional Council and area, different amounts of water can
be taken as a permitted activity (i.e. without Resource Consent). These
amounts may vary depending on whether the water is being taken from above or
below ground, the catchment area, property size, frequency, and even time of
year (many Regional Councils have different rules for periods of low
AN EXAMPLE -
THE WAIKATO REGION
There are catchment areas within the Waikato Region that are considered
over-allocated, and demand continues to increase.
The Waikato Regional Council has introduced a variation to the Regional Plan,
known as 'Variation 6' which changes the rules for the taking of water.
Generally the variation means that a farm taking water beyond 15 cubic metres
per day, and using water for dairy shed washdown and milk cooling must apply
for resource consent.
These Resource Consent applications are then to be processed by catchment
area, which should reduce processing costs. When the consents are processed,
some applications will be treated differently:
that had consent to take water for dairy shed washdown and milk cooling on 15
October 2008 are to be granted consent to take (at least) the same amount of
water as under their 15 October 2008 consent, provided certain conditions are
did not have a consent at that time will be subject to further requirements,
and are not assured that consent for the full requested take will be granted.
Farmers in the
region are recommended to obtain advice as to whether they are required to
apply for Resource Consent, even if they do not take over 15 cubic metres of
water. This is particularly applicable if they are in areas that are
over-allocated. Resource Consent applications must be made by the applicable
deadlines to assist in ensuring ongoing water rights.
It should be noted that each region has very detailed rules regarding water
usage. Therefore if you are unsure about your rights and obligations in
respect of water usage it is advisable to seek legal advice.
- London 2012
The courtroom may not be an
athlete's usual arena of competition however disputes do arise in sport like
The Court of Arbitration for Sport
is the supreme tribunal for all sports-related disputes across the globe.
Ordinarily based in Switzerland, the Court established a specialist ad hoc
division in London for the Games. Its charge: to quickly, freely, and finally
detemine any and all disputes that may arise throughout the competition.
In total, 11 disputes by athletes and nations were decided by the Court in
London. The issues varied, but in all cases the Court pulled together a panel
of arbitrators from around the world to make a decision, usually within 24
hours, offering real-time solutions for athletes at the Games.
The women's triathalon was such a case. Sweden, whose athlete received the
silver medal after a photo finish, challenged the referree's decision
believing they deserved gold. The Court upheld the 'field of play' principle
and decided not to intervene. Rightly or wrongly the referee had made the
call. Further argument was reserved for the fans alone.
Not everyone acting for a buyer
or a seller in a real estate transaction is a lawyer. The Lawyers and
Conveyancers Act 2006 introduced to New Zealand the separate profession of 'Conveyancer'.
Conveyancers are distinct from 'Lawyers' or 'Solicitors'. They are not
required to hold law degrees or be supervised by lawyers.
Lawyers may provide a full range of services to the public, being both
conveyancing services, and general legal services. Conveyancers may provide
conveyancing services, but are unable to advise on other areas of law.
or selling a property or business rarely happens in a vacuum. Personal,
business and financial factors are all often critical considerations. Your
lawyer can not only advise on the transaction at hand, but also on how the
transaction will affect you and your family. Relationship property laws,
estate planning and protection from creditors, while not an extensive list,
are all factors you should be talking to your legal adviser about when buying
If you have any questions about the newsletter items,
please contact me, I am here to help.
Scannell & Co - 122
Queen Street East, Hastings
(06) 876 6699 Fax: (06) 876 4114 Email:
information in this newsletter is to the best of the authors' knowledge true
and accurate. No
liability is assumed by the authors, or publishers, for any losses suffered
by any person relying directly or indirectly upon this newsletter. It
is recommended that clients should consult S J Scannell & Co before
acting upon this information.
S J Scannell & Co
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