According to the
2012 United Nations World Drug Report, New Zealand has comparably high levels
of illicit drug taking, particularly cannabis use. Not surprisingly, this is a
concern for employers wanting to maintain standards and safety in the
workplace. This issue creates a conflict between an employee’s right to
privacy, and the rights and obligations of employers to provide a safe,
healthy and efficient working environment.
Having an effective drug and alcohol policy is important for employers. This
policy, generally found in the employment contract or its accompanying
guidelines, specifies the rights and obligations of employers and employees
regarding the misuse of alcohol and the use of illicit drugs. The policy
should specify the consequences of attending work under the influence of
alcohol or drugs and any relevant testing regime. As with all employment
issues, there is a general duty of good faith imposed on both parties. An
employer may require pre-employment testing as this will take place before the
employment relationship and therefore before the duty of good faith
Random or “suspicionless” testing is permitted only in safety sensitive areas
of a workplace. The Employment Court noted in a case involving Air New Zealand
that pilots, aircraft engineers and flight planners, as employees in safety
sensitive areas, might be the subject of random testing whilst HR advisers,
in-house lawyers and payroll staff would not. Clearly, there is grey area when
determining whether an employee works in a safety sensitive area. In any
event, provision for random testing should be recorded in the drug and alcohol
policy and provided to the employee.
Where a workplace environment is not safety sensitive, a drug and alcohol
policy may specify that an employee will be subject to testing if there are
reasonable grounds to believe that an employee is impaired at work. Reasonable
grounds may include; immediately after an accident or near miss, or where drug
use is witnessed. The reasonable grounds must be specifically related to the
behaviour of the employee to be tested, and a general suspicion that employees
are taking drugs is insufficient. An employee being tested must be presented
with any evidence against him or her - hearsay evidence should be treated
cautiously as generally this may not be sufficient.
Inside this edition
Testing In The Workplace
Council Liability For Leaky Buildings
Alternative Dispute Resolution
Richer, For Poorer - Contracting Out Of The Property Relationships Act 1976
Proposed Introduction of Starting Out Wage
Importantly for employers, a
positive drug result will not be taken into account in determining damages for
unjustified dismissal if there were no reasonable grounds for the test. In
other words, the mere fact that an employee turns out to be a drug user will
not remedy any procedural impropriety by the employer.
DRUG TESTING PROCEDURE
The most common procedure for drug testing is to have a preliminary “screening
test” that results in an instant negative/positive result. An employee who
returns a positive result should undergo a laboratory confirmation test. The
confirmation test is important because the screening test is designed to be
highly sensitive and may return wrongly positive results - poppy seeds and
some forms of cold and flu medication may increase the chances of incorrect
screening test results.
Provided that the
delicate relationship between employee privacy and employer standards and
safety is balanced, drug and alcohol policies benefit both parties in the
A recent Supreme
Court decision has altered the scope of a council’s liability in relation to
the leaky buildings saga.
Body Corporate No. 207624 v North Shore City Council (SC 58/2011)  NZSC
83, held that councils owe a duty of care to all owners of buildings in
regards to their relevant functions carried out under the Building Act 1991
(‘the 1991 Act’). Previous decisions had drawn a distinction between
residential and commercial properties when it came to a council’s duty of
WHAT DID THE SUPREME COURT SAY?
The case before the Court involved a building that was used both as a
commercial property and a residential one – the majority of the rooms were
motel rooms, and there were also six residential penthouse apartments. In the
judgment, the Court stated that councils owe a duty of care in their
inspection role to owners of premises, both original and subsequent,
regardless of what the building is used for. It also stated that the same duty
applied to building certifiers who were elected to carry out the work instead
of a council under the 1991 Act. This judgment only relates to the 1991 Act,
as a position with regards to the Building Act 2004 (‘the 2004 Act’) was not
covered by the Judgment.
decision applies not only to leaky building cases, but to everything councils
do in their inspection role. However, it is expected to be heavily relied upon
and tested in leaky building litigation.
There are some hurdles to benefitting from this judgment:
applies only to building carried out while the 1991 Act was in force (prior to
the 2004 Act),
may not be brought against anyone under the 1991 Act 10 years or more after
the act or omission in question (for example, up to 10 years after the date of
the council issued code compliance certificate, if that is the document relied
upon in litigation),
responsibility is limited to the exercise of reasonable care solely in terms
of ensuring construction in accordance with the building code.
These constraints may be troublesome for claimants. At this
point, proceedings relating to acts or omissions before January 2003 may be
time barred, and given that parts of the 2004 Act came into force in November
2004, the window for claims under the 1991 Act is small and constantly getting
On the other side of the coin, the judgment opens up claims for
past and present owners of buildings, and it does not only apply to leaky
TO FROM HERE?
This decision has widened the scope for civil claimants with regards to a
council’s duty of care in their inspection role, and will likely lead to
litigation. Potential claimants need to act quickly in identifying and filing
any claim, as timeframes are running out. It will also be a case of waiting to
see what the position is with regards to the 2004 Act, as this will be of
utmost importance for owners of buildings constructed under the new Act.
Acting as a
guarantor for someone, often in respect of payment of money, means that you
agree to meet their obligations if they do not. Guarantee clauses are common
in leases, hire purchase agreements, and in general dealings with a bank.
There are potential pit-falls for you to consider when agreeing to be a
SIGNING A GUARANTEE
A guarantee agreement must be in writing and must be signed by the guarantor.
It is advisable that if a party is signing in another capacity as well, that
they sign the contract twice, once in their capacity as borrower (e.g. as a
director of a borrowing company), and once as a guarantor.
TYPES OF GUARANTEES
There are many different types of guarantees, varying from a specific
guarantee to cover a particular transaction, a continuing guarantee limited to
a fixed amount through to a continuing guarantee where the guarantor agrees to
meet all obligations of the other party. Many guarantee documents include both
a guarantee and an indemnity, which means that not only is the guarantor
guaranteeing the obligations will be met, they agree to protect the receiver
of the guarantee from any harm or loss.
In most contracts
where there is more than one guarantor, they are treated as being “jointly and
severally liable”. This means the creditor can choose to pursue whomever they
like to recover the debt. Even if you are only one guarantor amongst many, you
may find yourself held liable for all of the debt. In this case you may have a
right to compensation from co-guarantors, but enforcing this right can be a
lengthy and costly process.
RIGHTS AND OBLIGATIONS OF THE GUARANTOR
As a guarantor who has been called upon by a creditor to pay a debt, you have
a right to require repayment by the original debtor. Of course in practice,
this right may not amount to much protection as often the creditor is
enforcing the guarantee due to the inability of the debtor to make a payment.
A guarantor can however use the securities available to the original creditor.
In other words, if a debt secured by a mortgage is paid in full by a
guarantor, the guarantor is entitled to take over that mortgage security.
INDEPENDENT LEGAL ADVICE
Creditors rely on a guarantor making an informed decision. To ensure their
guarantee is enforceable creditors should disclose to the guarantor
information about the obligations they are guaranteeing and be satisfied that
the guarantor appreciates the risk they are assuming. The Code of Banking
Practice goes further, by requiring that prospective guarantors be advised to
seek independent legal advice. The party providing legal advice is then
required to confirm the guarantor understood the obligation they were assuming
at the time they entered the guarantee.
If you decide to act as a guarantor for someone, including close friends and
family, you should familiarise yourself with their financial position, read
the contract very carefully and obtain legal advice to determine what your
liability might be. Everyone is naturally optimistic when it comes to their
family and friends, but it is vital to be aware of the risk you are assuming
and make an informed decision.
Dispute Resolution (‘ADR’) is a collective term that describes a wide range of
processes used to resolve civil disputes. They are an alternative to the more
traditional means of resolving disputes by way of litigation.
is adversarial by nature. Judges impose their own decisions on the parties so
the process tends to be formal and requires strict rules of procedure and
evidence. In this environment the parties’ positions often become polarised
and this can lead to an increasingly expensive and protracted resolution
process. ADR seeks to avoid this by enabling the parties to achieve their own
solution. The most common examples of ADR are Mediation, Negotiation,
Conciliation and Arbitration.
Mediation employs a neutral third party (the mediator) to assist the parties
in negotiating a settlement.
It is fast – a
mediation can be convened relatively quickly and the time needed to achieve a
result is usually much less than through the Court system,
It is cheap –
while mediators charge a fee the costs are usually much less than the parties
would incur by going to Court. When the use of mediation services is directed
by the Court itself mediation is usually free.
Negotiation creates a dialogue between the parties intended to achieve mutual
It is often
assisted by the involvement of professional third parties, usually lawyers,
who represent the parties’ interests rather than being neutral,
negotiation is often thought of as tactical. In the context of a dispute the
parties may see one another as adversaries, which leads to “hard-bargaining”
as each tries to give away as little as possible. However, many disputes arise
between parties where the relationship between them needs to be preserved and
in these circumstances negotiation may be more integrated and focused on
Arbitration most resembles the Court process and is adjudicative rather than
submit their case to an independent arbitrator who will make a binding
decision. While the parties must agree to arbitrate (often by way of prior
contract) they are then bound by the decision of the arbitrator,
The parties can
agree on who the arbitrator will be, the rules of procedure and evidence, and
other issues to be addressed.
ADR is growing
in use and acceptance in New Zealand and around the world. The recognition of
ADR as an effective means of resolving disputes has meant a number of
jurisdictions, including New Zealand, often require the parties to undertake
ADR as part of the ordinary judicial process. The Family Court and Tenancy
Tribunal regularly make use of mediation services, and Judicial Settlement
Conferences (a type of Judge led mediation) are also used in dealing with
other civil disputes. Although ADR will always require the parties consent in
order to resolve disputes, the parties may be required to undertake ADR in the
hope an agreement can be reached before the Court will consider the dispute.
The Property Relationships Act 1976 (‘the Act’) applies to all
relationships including marriages, de facto relationships and same sex
The defining feature of the Act is that it provides for the
equal sharing of the assets and liabilities of the relationship irrespective
of the differing financial contributions of either partner throughout the
relationship. In many cases this includes situations where one party may have
brought significantly more assets into the relationship than the other.
The equal sharing provisions of the Act apply to all
relationships exceeding three years duration.
Parties may enter into an agreement to contract out of the
equal sharing provisions of the Act (“Contracting Out Agreement”). In order
for a Contracting Out Agreement to be enforceable, it must be in writing. Each
of the partners must also have obtained legal advice before signing the
Contracting Out Agreement. Each lawyer must also sign, certifying that they
have provided independent legal advice and witnessed their client’s execution
of the document.
Contracting Out of the Act becomes especially important when
there is a disparity in the financial positions of the partners. This
disparity in the financial positions of the parties arises where one party
brings greater net assets into the relationship than the other.
In the absence of a properly signed Contracting Out Agreement
the equal sharing provisions of the Act will apply. In the event that the
partners separate without entering into a Contracting Out Agreement the effect
can be a net transfer of assets from the wealthier partner to the less well
This can be particularly upsetting for the wealthier partner if
that separation occurs close to retirement age where there is limited
opportunity to recover financially.
The impact of the equal sharing provisions on the wealthier
partner is magnified if that person has the misfortune of experiencing two or
more separations without protecting their interests by entering into a
Contracting Out Agreement. This can have the effect of halving that person’s
net worth each time they separate from a three year relationship.
gifts are generally considered to be the separate property of the partner to
whom the gift or inheritance was given. However, when for example this gift or
inheritance is applied to repay the loan for the family home and the partners
go on to separate, the non inheriting partner is entitled to benefit from half
of the inheritance applied to reduce the borrowing for the family.
Assets in a Family Trust are not necessarily protected from potential
relationship property claims. In circumstances where the Family Trust was
settled during the course of the relationship or where relationship property
has been applied to sustain trust assets, the Trust can become tainted as
relationship property. This most commonly occurs when the income of one or
both partners is used to meet the loan obligations for property owned by the
A Contracting Out
Agreement is fundamental for anyone in a relationship wishing to secure their
assets, especially a partner entering into a second or subsequent
Proposed Introduction Of Starting Out Wage
The Minimum Wage (Starting-out
Wage) Amendment Bill was introduced into Parliament on 9 October 2012.
The Bill proposes to change the way in which minimum wage rates
may be prescribed to workers between the ages of 16 and 19, and in limited
cases workers over 20. It will open up the ability for the Government to
identify multiple classes of eligible youth, and set minimum starting out
wages for each class. The rate must not be set at less than 80% of the adult
minimum wage, and the period of payment at this rate will last for a maximum
of six months of continuous employment with the same employer, or until the
worker no longer satisfies the Act’s rate criteria, whichever comes first.
There is divided public opinion on
the Bill, with its supporters on the one hand claiming that it will
incentivise employment of young workers, and its detractors seeing the reduced
wages as a failure to ensure a reasonable standard of living for young
Maori Wardens are a voluntary service
focused on youth, community safety and reassurance.
The office of Maori Warden was established
under the Maori Social and Economic Advancement Act 1945 (“the Act”). Maori
Wardens are seen as formal agents of state control, and are commonly seen in
public and at Maori events providing security, general assistance, first aid,
traffic control and crowd control.
Maori Wardens are not police officers but
have limited powers consisting of; the right to enter into hotels for
prevention of drunkenness and disorderly behaviour, the authority to prohibit
the illegal sale and consumption of liquor in the vicinity of a Marae or Maori
meeting place, and the power to request a driver to surrender their car keys
if they are considered to be incapable of driving, due to intoxication.
At the discretion of a Maori Warden,
violators (Maori or otherwise) can be tried before a Maori Committee Tribunal
or through summary proceedings at a District Court and shall be liable to a
fine not exceeding $40.
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.
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