ADLS Annual Report 2019 - 2020

Connecting New Zealand Lawyers

Annual Report

For the year ended 30 September 2019

ADLS is a respected and unique member organisation that leads from the front of an ever-changing legal world. We exist for our members; connecting them to excellence within the profession and building a community of progressive, passionate, forward-thinkers that’s welcoming, insightful, supportive and proactive for the profession of today and tomorrow.

Contents

President's Report 4

CEO's Report 8

ADLS Council Update: Chancery Chambers 10

Membership 12

Connecting with the Profession 14

Connecting through Collegiality 16

ADLS University Programmes 18

Law Committees Update 20

ADLS/REINZ Agreement for Sale and Purchase of Real Estate 23

Continuing Professional Development 24

Judicial Appointments 26

ADLS Council 27

Financial Statements 29

President’s Report

I am pleased to have this opportunity to report on the past year of progress for ADLS, and to look ahead to the challenges and opportunities that face us as a new decade begins.

All members will have had the opportunity of reading the whole of this Annual Report in which detailed and specific information about the role that the Society plays within the profession and also its important liaisons with institutions which intersect with the law.

I wish to begin by acknowledging my colleagues on the Council for their work during the year. I particularly wish to acknowledge and thank Mary Anne Shanahan, who steps down from Council this year, for all she has done for ADLS having served six years on the Council. I also want to thank the ADLS executive team and staff for everything they do for ADLS and its members.

Next, I want to acknowledge the many volunteers of our 17 committees. They all have demanding jobs but give of their valuable time and expertise to ensure we engage widely regarding such matters as new legislation and regulations, and raising issues that affect the profession and New Zealanders generally. Their work lies at the heart of our membership organisation and gives ADLS mana both within the profession and in the community.

It has been another strong and busy year for ADLS in terms of its core businesses. Membership remains strong and providing a range of networking and other collegial events for practitioners to meet and share experiences has again been a highlight.

Financial

While the underlying financial performance of the organisation remains sound, with an underlying (trading) surplus of $359,877, it is unfortunate that we must report an overall after tax loss for the year.

In 2016 ADLS, as a lease inducement, invested $450,000 in a fitout of the ground floor restaurant to attract what was then described as a ‘prestige tenant’. The tenancy ended in 2018. As part of the settlement with the tenant, $612,000 of assets were transferred to ADLS. The restaurant has been vacant for some period of time, and as a result, an impairment of $400,130 on this asset has been recorded in this year’s accounts.

This has resulted in a overall loss of $128,000 due to this one-off write-off for the financial year ending 2019, an unfortunate turn around of $695,000 on the 2018 financial result. While it is disappointing to report a loss to you for the year, this is not a reflection of the underlying profitability of ADLS.

A drop in overall income of 11% is mainly attributable to loss of restaurant income and rooftop terrace hire, and ADLS cash reserves remain healthy at $3.5m, an increase of 6% over last year.

IT Upgrade

During 2019 ADLS began a project to replace and upgrade its key IT systems. This project will deliver an enhanced online presence during 2020 and beyond by improving the ADLS website and associated systems. The most apparent change will be a new and improved experience for the many members and other people who connect with ADLS online every day. The ADLS website itself will be more intuitive and easier to use when accessing the wide range of ADLS services.

Improved online functionality will include self-service features and the site will also be optimised for use on mobile devices to better service our busy members.

Behind the scenes, brand new management and financial systems which support the delivery of all ADLS services will also be implemented. This project will streamline and improve the services being provided to members by ADLS during 2020 and beyond.

This project is an important one for ADLS and members will see the results and benefits of that investment following the launch later this year. We look forward to hearing your feedback.

The Building (Chancery)

When I offered myself to members for the position of President last year, I raised two matters which I wished to address during this term. One of the matters concerned the continued ownership of Chancery Chambers.

My intention on becoming President was to put in place plans that would future proof Chancery Chambers, and above all put members views at the heart of it. Key to this plan was progressing an initial $2.4 million capital expenditure and maintenance project as part of a larger repair and maintenance plan.

This plan, however, has had to be placed on hold following the result of a seismic report into the building that indicated Chancery Chambers is 18% of New Building Standards (NBS), considerably lower than previously advised by Auckland Council.

Given this assessment, which will be peer reviewed, Chancery Chambers may be deemed an earthquake prone building by Auckland Council in the future. Many other heritage or character buildings in Auckland and across the country have already been deemed earthquake prone. To provide some context, local councils collectively estimate there to be over 10,000 earthquake prone buildings across New Zealand, and of course Auckland is considered to be an area of low seismic risk.

Further investigations are ongoing and strengthening work will be required in the longer term. The Building Act provides for a timeframe of 35 years for strengthening work to be undertaken on such buildings in Auckland. As you would expect, we have advised all tenants and staff of this information, along with the assessment based on expert advice that there is no reason to treat the situation as anything other than business as usual in the meantime.

While there is no immediate need to undertake the strengthening work, the seismic report does of course highlight a significant future issue for both the Council and members to carefully consider.

ADLS differs from larger businesses that may have a broader property portfolio and the resources to manage buildings in a variety of stages of their development and maintenance. Historically, we have been used to viewing Chancery as a source of much needed rental income rather than a building requiring significant capital investment.

Chancery Chambers continues to be a magnificent heritage building which occupies prime land in the heart of Auckland city’s central business district. The question is not whether it is a wonderful building – rather it is whether ADLS, when considering its goals and objectives should continue owning this particular building into the longer term. The question is, whether or not retaining the building is in the best financial interest of the membership.

Since receiving the initial information regarding the building’s seismic rating, your Council has had a number of detailed discussions about the potential challenges of continued ownership. In particular, we have asked ourselves the question of whether we consider ADLS to be the logical owner of Chancery Chambers in say ten to fifteen years’ time.

Given the need to borrow significant sums of money to undertake the capital, repair and maintenance projects already identified, plus the cost of seismic strengthening, increasingly the view of the majority of the Council has been that ADLS may not be the logical long term owner of Chancery Chambers.

More detailed information on the continued financial implications of continued ownership of Chancery is set out elsewhere in this Annual Report and I encourage members to consider it carefully.

Following feedback from members during the last proposed sale process in 2018, some of whom have been critical of past attempts to sell the building, I’d make four points here in particular:

First, I will be ensuring that there is a full and open discussion on the future of Chancery Chambers at our AGM on 5 March. There both your Council and management will be able to take members through the situation in detail and the options ahead.

Second, as a Council we are united that it is the members who will ultimately make the decision of a sale or no sale. Council will in due course put a proposal to members along with all the necessary information to make a considered decision. This process will be timely but not rushed.

Third, we have heard the desire of members for there to be an open, market-led sale process, in the event that a sale is approved by members.

Fourth, it is my expectation that any new Council embarking on this process would provide members with information on how any sale proceeds would be used for the longterm benefit of members. All of us agree that Chancery Chambers is ADLS’ legacy asset, and should a sale proceed, funds raised must be equally safeguarded and ring fenced from day-to-day operations.

I must be honest with members and say that I am disappointed that a sale of Chancery Chambers is to again be considered. As you may know, it had been my strong intention to keep the building in ADLS members hands for the future. However, the additional information in the form of the medium to long term capital, repair and maintenance costs and the seismic report, especially when combined with a more challenging insurance situation as noted elsewhere in the building report, gives us little choice but to reconsider the matter.

The financial statements highlight the challenges ahead, and as your President I do not consider it prudent that the organisation should go into considerable debt to undertake the work necessary to strengthen the building in addition to the other maintenance and capital works required. Those funds would be better invested in other critical parts of our organisation’s service to members.

Over the last year the Council has spent an enormous amount of time and energy on the building issue. While that has been appropriate given its significance to our balance sheet, there is an opportunity cost. We have had less time to spend focussing on how best to grow and enhance membership services, and on such strategic issues the profession may face in the future.

These include:

1. ADLS involvement in the recently announced NZLS strategic review and opportunities that might benefit that (common) relationship.

2. Considering an independent review of the governance of ADLS.

3. Exploring opportunities to expand membership, membership services, products and addressing the increasingly competitive environment in which it operates.

4. Continuing the update of the ADLS IT systems to further leverage superior competitive membership and executive services.

Governance

The matter of governance of ADLS was the second matter I raised when I offered myself for President. In particular I raised the matter of the appropriateness of the current governance structure of ADLS and the value the membership received from the President’s current honorarium.

An independent report was received from EY concerning the honorarium and considered by the Council. The Council accepted the recommendation in that report and the honorarium will be reduced from $111,720 to $51,600 per annum. The next stage in this review process I believe is to obtain an updated independent report to ascertain whether the current governance structure continues to be suitable for ADLS now and into the future and to explore possible alternative governance structures. The last such report was obtained in 2015 from Board Works International. ADLS businesses and assets and the complexity of the organisation and the environment in which it operates have grown considerably since the last report was undertaken and I believe this needs to be revisited. This matter will be raised at the AGM.

Summary

Setting aside matters concerning the building, the Society is in good heart. Membership numbers are increasing, the relevance of the organisation nationally continues to grow. ADLS is continuing its significant investment in technologies which benefit our CPD, business and membership systems. We are proud of the leadership we show in the profession generally, in the promotion of collegial events and in the community.

ADLS is reliant upon the support and encouragement of its members for its success. On behalf of the Council and staff of the society, I wish to thank you for your trust for that support.

It is my hope that during 2020 we will be able to spend more time and focus on these matters. We have been fortunate that the strength of our management team has ensured a strong business as usual year, and again I thank them and all the staff on your behalf.

Sincerely Tony Bouchier President

CEO’s Report

As we approach the end of another decade it is timely to look back and reflect not only on the past year, but on ADLS over this time. Eight years ago the recently incorporated ADLS was a somewhat rudderless organisation, unsure of its direction and place in the world. Today we are a vibrant and energised organisation with over 5,000 members across New Zealand, clear on our direction and purpose, providing quality tools and support, connecting NZ Lawyers, and making a valuable contribution to the legal profession.

This would of course not have been possible without you, our members. ADLS is also enormously grateful for the generous contributions of time and subject matter expertise of our members on our committees, and CPD speakers and contributors. A heartfelt thank you is due to everyone who has contributed to our excellent programmes in the 2019 financial year and shared in our success.

Over the last decade there has also been much change in the environment in which we operate. This is true both of the world at large, and the legal profession generally. The influence of technology is significant as we increasingly see the impact of AI and technology on the way we do things. Socially, there has also been a shift – an acknowledgement of the importance of wellbeing and the ‘whole person’ in the workplace, as well as a spotlight on some of the bullying and harassment behaviours in parts of the legal profession, highlighting the importance of not tolerating and accepting such behaviours, and creating organisational cultures that are safe and underpinned by respect and inclusivity.

ADLS recognises the difference well executed, fit for purpose technology can make to busy, time poor legal professionals. Our CPD programme was an early adopter of live streaming capability, as many of you will be aware. ADLS has also made further advances with its digital signing technology over the last year and will soon make it available for the execution of Authority and Instruction (A+I) forms.

We also recognise a changing dynamic in the population as we continue our focus on creating opportunities and connections with young lawyers through a number of key strategies and touchpoints – from our connections with law students, strategic partnerships with tertiary institutions across New Zealand, including with our most recent, sixth partner, University of Otago Law School; targeted CPD and collegial events, our mentoring and work experience opportunity programmes, and Newly Suited Committee – ADLS is investing in growing and supporting the younger generation of lawyers.

There have been many great achievements this year, but one I’d like to focus on here is the launch of the new 10th edition Agreement for Sale and Purchase of Real Estate (ASPRE). This project highlights the fantastic work of our committee volunteers and is the culmination of significant time and expertise of some of the key leaders in this area, willing to share their expertise for the benefit of the profession. It also demonstrates our strong partnership with REINZ, who jointly own the form, and our collaborative working relationship.

One thing is certain, the pace of change will continue and it is likely that in the next five to ten years the legal landscape and world will be significantly different again. ADLS must be poised to adapt and lead change to keep moving forward and provide the influence and thought leadership for which we

have become renown. This means looking at the way we do things to ensure our focus is on our strategic goals and not diverted to other activities, and understanding in depth the key challenges and issues that the legal profession, and you as lawyers, face today and into the future.

We always value feedback that we receive in our interactions with members at events across the country, and we are keen to gain your insights this year about key projects and issues affecting ADLS, as well as further understanding your most pressing issues and challenges.

ADLS continues to be operationally strong, with a strong balance sheet. However, our financial performance was significantly impacted by issues stemming from Chancery Chambers. For the first time our audit report is qualified due to uncertainty in quantifying the cost of the building remedial work. As members can appreciate this is not an ideal or sustainable situation. The Council have provided an update on Chancery Chambers later in this report.

We want our rich and proud history to be a springboard to the future, rather than anchoring us to the past. Our agility will be critical to our future success and we must be open to possibilities that we may not have entertained merely ten years ago, and be ready to adapt.

Again, a very big thank you to all our members and supporters, and to the ADLS team. We look forward to being of service to you, and engaged with you, in the year ahead.

Sincerely

Sue Keppel Chief Executive Officer

We want our rich and proud history to be a springboard to the future, rather than anchoring us to the past.

ADLS Council Update: Chancery Chambers

As outlined in the President’s Report, ADLS is again considering the question of ownership of Chancery Chambers.

The Council recognises that Chancery Chambers is a beautiful heritage building that, despite being owned for only 30 years of ADLS’ 141 year history, has endeared itself to the hearts of some ADLS members, and for some is an iconic symbol of the organisation.

While this emotional connection is felt by the Council too, the Council is tasked with governance and what is best for the organisation, both for the period of its tenure and into the future, and must ensure that it is acting in the most prudent and fiscally responsible way.

When this matter was raised with members in 2018, the Council at the time outlined the reasons behind the recommendation to sell the building. To summarise and recap these were:

Financial

Š

The financial implications of continued ownership. The requirements of an old, heritage building mean that there will need to be considerable investment in the building on an ongoing basis. While planning is key to managing this, the age of the building means that unforeseen issues requiring remediation continually arise, and are often financially significant, particularly for an organisation with the financial resources of ADLS. Past experience has shown that despite rigorous forecasting processes, the cost of building maintenance and repairs invariably exceeds that budgeted.

Š Increased building costs may result in limited funds being available elsewhere, potentially leading to an erosion of our core services and a reduction or cessation in investment in market leading innovations for the advancement of the profession. ADLS wants to continue to thrive and grow and be able to invest in innovations of the type it has delivered in recent years – CPD live streaming and On Demand products, and WebForms and Digital Signing.

None of these reasons have changed, however, more information has since arisen which again brings into question the value and benefits of ownership.

This report is intended to provide members with summary information on the new information and the financial implications of retaining ownership of Chancery Chambers into the medium and long term.

Earthquake Strengthening

A seismic report commissioned by the ADLS Council in the later months of 2019 indicates that Chancery Chambers is rated as 18% of New Building Standard (NBS). The structural engineers’ report makes clear that there is no immediate safety risk to occupants. ADLS will get this engineering report peer reviewed, due to the importance of this issue and consistent with best practise in this area. The Building Act gives ADLS, or any subsequent owner of Chancery Chambers, up to 35 years to undertake the necessary strengthening work.

Š

Concentration of financial risk in one asset class.

Services to Members

Š

The building largely benefits Auckland members. When the building was purchased the organisation’s remit was members in the greater Auckland and Northern regions; it now has a national focus.

To date engineers have been reluctant to provide a cost estimate in advance of work as their experience when working on old buildings is that the requirement for further work is invariably discovered during the building process, significantly increasing the costs of the initial quote.

Scale of Planned Building Maintenance and Repair Works

Š

The opportunity cost of ownership – a focus on activities relating to the building to the detriment of other more added value activities to benefit members and the profession.

After a process of working through building maintenance and repair requirements, Council agreed that building works in the order of $2.4 million would take place in 2020. In addition, ADLS has recently discovered a new issue that may be found in other buildings of similar age and construction, known as concrete carbonation. This is currently being investigated to establish the extent of the issue and potential financial impact. Estimates, without a full engineering assessment being completed, indicate that the remediation of this issue

would be at least $4m. Detailed financial analysis, verified independently by Deloitte, shows that the costs of the 2020 maintenance work in addition to the cost of remediation of the carbonation issue (based on the initial conservative estimate) is beyond the financial resources of the organisation. Any earthquake strengthening work required would also be an additional cost.

ADLS is waiting until all significant building issues are further investigated before commencing with the 2020 planned maintenance works.

Work on the remedial issues is likely to be significant in scale and disruptive in nature, and therefore would likely require the building to be vacated for a period of time. If this was the case, tenants – including ADLS – may have to find temporary alternative accommodation. This would add further cost and risks to this process.

The Insurance Position

The practice of ADLS has been to fully insure Chancery Chambers for replacement value.

As a direct result of the seismic report, however, ADLS has not been able to achieve replacement insurance cover going forward. Due to the seismic rating being below 20%, indemnity cover of $10.35 million was the only level of insurance able to be achieved for the building as a whole. There is indemnity only cover both in the event of an incident affecting the whole building, or where damage occurs to only a portion of the building. This means that there is only partial replacement cover for the building and from now on insurance proceeds alone will not cover the full costs of building repair.

Council is disappointed that this is the best cover that could be achieved, but that is the reality of the situation ADLS (and any other organisation with a building under 20% of NBS) finds itself in the context of the current challenging domestic and international insurance market.

Council’s Assessment of the Overall Situation

The issue of continued ownership of the Chancery Chambers building is one that three successive Councils have been discussing at length, and grappling with, since 2016. Indeed, this was noted in the President’s Report in the Annual Report for the year ending September 2016.

This Council, like the two before it, believes ADLS faces significant risks in retaining ownership of Chancery Chambers into the medium term. To summarise, the key risks are:

1. With significant construction works to be undertaken, including carbonation remediation and earthquake strengthening works, ADLS will be under greater financial pressure than in previous years and this will require us to consider initiatives on both the cost and revenue fronts to manage and subsequently reduce debt over time;

2. Strongly negative cashflow implications if it is determined that Chancery Chambers will need to be vacated for a period (estimated to likely be greater than two years for works of this scale) once the building work gets underway. If the building needed to be closed for longer than this time, that would create an additional financial burden;

3. A challenging insurance position, with the move from full replacement to indemnity cover placing ADLS at greater risk in the event of a major incident, such as fire;

4. While any potential closure of the building would only be temporary, the risk of losing tenants longer term due to the disruption and uncertainty cannot be ruled out;

5. The opportunity cost of significant Council and management time needing to be spent on managing Chancery Chambers issues may result in less than optimal focus on other member related matters, and reduce or halt the investment in market leading innovations and thought leadership that have characterised ADLS’ recent history.

Given a combination of the recently discovered building issues and the consequent move to indemnity rather than replacement insurance noted above, the Council considers achieving bank loans of the scale required to fund potential works would be a challenge. Further, Council does not consider it to be in the organisation’s interests to take on a large level of debt.

Chancery Chambers is a magnificent character building in a great location. It has been a great asset for ADLS since its purchase in 1989. There is no doubt that the building continues to have enormous potential, but as we begin a new decade, there is a real question as to whether ADLS is the right owner of Chancery Chambers for the medium and long term, or whether it would be more appropriately owned by an organisation better equipped to undertake the necessary work to maintain Chancery Chambers for the future.

Next Steps

We will be consulting with members on this issue in the coming months, and are keen to hear your views.

Membership

Through advocacy, thought-leadership and continuous efforts to help legal professionals develop important skills and connect with each other, ADLS has once again recorded a growth in membership, building a strong community of more than 5,000 members across New Zealand.

Membership at 30 September 2019 was 5,108 with 368 new paid members having joined our organisation throughout the year. Membership outside of Auckland was maintained at 45% of total paid membership, reflecting our national focus.

In June we welcomed the University of Otago to our successful University programme, providing work experience opportunities to senior law students and mentoring support to newly qualified lawyers. This latest addition means that ADLS is now partnered with all six university law schools across the country. Student membership also increased significantly, with 304 new student members joining during the year, bringing the total student membership to 990.

Membership Annual Report 2018/19

outside of Auckland

(Excluding students) (Excluding students)

Other

We use our publications LawNews and the e-Bulletin to keep our members informed and connected to the latest developments in the legal profession.

LawNews, our weekly publication, has had another excellent year with online subscriptions now exceeding those for the print edition.

Thanks to all our contributors whose expertise and dedication are critical to the publication’s success. We aim to provide analysis and insight into the latest developments in the law and because diversity of opinion is important to us and our members, we always welcome new contributors. If you are interested, please get in touch with the editor, Jenni McManus, at jenni.mcmanus@adls.org.nz.

We have also introduced a strong news emphasis on our front pages, aimed at raising issues of interest to the profession. Topics tackled this year have included the challenges of AML/CFT compliance, name suppression, the need for diversity within the judiciary, freedom of speech, prisoner voting rights, the pilot sexual violence and the Alcohol and Other Drugs courts, courtroom bullying, and the use of electronic devices by lawyers during court hearings.

During the course of the year we interviewed two key members of the judiciary who, we believe, are set to make their mark on New Zealand’s justice and courts systems: Chief Justice Dame Helen Winkelmann GNZM and Chief District Court Judge Heemi Taumaunu.

There were 44 issues of LawNews between October 2018 and September 2019, including two bumper issues of 16 pages.

ADLS’ e-Bulletin, which includes all that is new in the New Zealand legal profession, produced 45 online editions this year with subscriber numbers now at 11,379.

Social Media

In the past year ADLS has made significant progress in developing its social media presence through engagement with external partners with social media strategy and management expertise.

ADLS saw growth in LinkedIn followers (26%) and Facebook (10%). The involvement of social media experts will exponentially improve the number of followers and engagement.

New Zealand Lawyers Directory and Find-a-Lawyer

ADLS printed another two editions of the New Zealand Lawyers Directory in November 2018 and May 2019 respectively. The publication continues to be widely supported by the legal profession with over 2,400 copies printed and distributed every six months to a significant number of New Zealand’s law firms and organisations.

ADLS’ Find-a-Lawyer search function on the website received nearly 300,000 page views this year.

Top: A selection of this year’s LawNews issues

Bottom: The latest edition of the New Zealand Lawyers Directory

ADLS has travelled the length of New Zealand, hosting events in Whangarei, Invercargill and many cities in between. We substantially increased the number of events hosted from 40 to 48, including first-time cocktail functions in Invercargill and Rotorua, and the launch of the Newly Suited “Ten Questions with…” series.

Once again, our breakfasts have proved popular as we hosted the Attorney-General, the Honourable David Parker, and the Governor of the Reserve Bank, Adrian Orr.

We also hosted an entertaining evening with Jimi Hunt, learning about the importance of maintaining good mental health, and how we can improve our overall wellbeing. We thanked and bid farewell to outgoing ADLS President, Joanna Pidgeon, with cocktails at the Northern Club. This was followed by a successful Employment Law Dinner at the Maritime Room, and an Immigration Law Dinner with the Minister of Immigration, the Honourable Iain Lees-Galloway.

Our lawyers’ lunches have become a go-to collegial event for the profession, with registration increases of up to 75% in some centres. There is increasing awareness about how enjoyable, in addition to providing excellent networking opportunities, these lunches are. There are currently 16 lawyers’ lunches taking place across the country, with plans to increase this to 20 in 2020.

ADLS University Programmes

ADLS is committed to supporting legal professionals and future law graduates throughout the early stages of their careers by offering professional development and collegial opportunities through a range of programmes and initiatives.

Building connections between the profession, academia and law students is an essential focus for us. Continuing our long tradition of supporting law students by providing opportunities for career growth and networking, ADLS, in partnerships with six New Zealand law students’ societies, runs programmes designed to assist future law graduates with their entry into the profession.

Introduction of University of Otago to the ADLS University Programmes

Earlier in 2019, ADLS was pleased to welcome the Society of Otago University Law Students (SOULS) to the ADLS University programme. Teddy Rose, the 2019 term President of SOULS played a key role in the launch of this programme, which is sure to be a longlasting relationship. The University of Otago is the final New Zealand university to join the programme, which makes this a notable milestone for ADLS.

To launch the partnership, ADLS held a pizza lunch and buddy evening in Otago in August 2019. The pizza lunch garnered 30 student registrants and the buddy evening had a total of 15 students paired up with Newly Suited lawyers forming their new mentoring relationship.

Student Registrations

In addition to the recent on-boarding of SOULS, ADLS continued to support the programme across each of the New Zealand universities. A total of 304 students became new members of ADLS, bringing the total student membership count to 990. Nearly one third of ADLS’ current student members joined during 2019; pleasing growth and evidence that students value the support that ADLS can provide.

Work Experience Programme

The total number of ADLS facilitated work experience listings for law nearly doubled this year, to reach 45. Although pleasing, there is still work to do to increase opportunities for students outside Auckland.

Buddy Programme

The purpose of this programme is to help senior law students develop a relationship with a contact in the profession, who could provide valuable support and guidance. Over the year, 115 students from five law schools were buddied up with a Newly Suited lawyer, achieving 61% growth in buddy connections and demonstrating the keen interest amongst students to connect to the legal profession, as they prepare for their transition to a career in the law.

Case Study: Work experience programme forges important connections

Third-year University of Otago law student Bill Caldwell is working at Webb Farry Lawyers over the summer holidays and is absolutely loving the experience and connections he’s making.

“During my studies I had been working at a café and had planned for this to continue over summer, as I found the idea of cold-calling law firms a bit daunting. I then heard about a position at Webb Farry, available through the ADLS Work Experience programme, and thought that I would apply. The online application process was so easy and I was more confident because I knew the firm was looking.

“I am learning so much; I have never worked in an office before. I am enjoying getting amongst it and the staff have all been amazing. I am learning how to use the practice management software and assisting with general legal office work including working with deeds, opening and closing files and scanning documents. Whatever is needed.”

Before starting at Webb Farry, Bill was particularly interested in commercial property, trusts and estate law. Bill says being able to chat to practising lawyers is helping him gain a better understanding of the practical aspects of legal work.

“Talking to the solicitors has been really helpful, they’re able to provide guidance and direction which will be useful for me in the future.

“This role has given me a great head start and I hope it might make getting a clerkship or a job after university that little bit easier,” he says.

From Webb Farry’s perspective, Administration Manager Margot Koele says the five-partner firm was considering additional administrative support over the busy pre and post-Christmas period and thought a law student would be ideal.

“The ADLS Work Experience programme was initiated around the same time and we thought it was a good opportunity to give it a try.

“ADLS made it easy to find and hire a student with the skills and attitude that we need. It provided us with access to people who are keen to work in the legal environment. They’re motivated and want to learn and experience as much as they can.”

ADLS launched its work experience programme with the Society of Otago University Law Students, in 2019, and Webb Farry Lawyers is one of the first employers to participate.

Margot encourages employers to give the programme a try. To be successful in securing work, Margot says that students should tailor their application appropriately.

“Make sure your letter relates to the position, explain what you’re keen to experience, be realistic about the role, and get the most you can out of it.”

Bill encourages his fellow students to get involved in a work experience placement opportunity. “I’m so glad I did, it’s been enlightening and rewarding.”

For employers who are looking for an extra pair of hands he suggests it is well worth considering a work experience placement as an alternative to a traditional recruitment process.

ADLS has work experience partnerships with all of the New Zealand Law Students’ Societies. To list an opportunity or to find out more about the ADLS Work Experience programme, visit: adls.org.nz or email workexperience@adls.org.nz.

The ADLS Work Experience programme made it easy to find and hire a student with the skills and attitude that we need.

Margot Koele, Administration Manager, Webb Farry Lawyers

Law Committees Update

The work of ADLS’ 17 committees is as varied as their specialist areas. A selection of the committees’ undertakings throughout the past year gives some insight into the breadth of their work and the level of influence they have. They are strong examples of what can be achieved by a collective of specialist lawyers directing their legal knowledge and experience to shape our law and practice so that it better serves the legal profession and New Zealand.

The committees consistently monitor developments in the law, engaging with key stakeholders, such as government and the courts. They raise issues and work in a collaborative way with a solutions-focused approach to arrive at improved outcomes. They are a strong voice in shaping the law through making submissions and meeting with ministers, government executives and Judges to ensure that change, which is inevitable but often no longer so incremental in its pace, moves in the right direction. They keep the legal profession informed by writing LawNews articles and updated by planning and presenting at CPD sessions. They also attend ADLS events to consolidate relationships that are increasingly important in an era where there is little time for collegiality and lawyers are increasingly busy and sit in relative isolation with a computer and phone.

The work of our committees is impressive. A selection of their work during the 12 months ending 30 September 2019 follows.

Criminal Law Committee

Convened by Marie Dyhrberg QC

The committee had significant engagement with various stakeholders, including the Police, the Ministry of Justice, the Courts, the Department of Corrections and the New Zealand Parole Board, to resolve operational issues for counsel and their clients. Its work with the New Zealand Parole Board culminated in a more streamlined process to facilitate the appearance of counsel in person at Parole Hearings. The committee also made a submission, well-received for its substance and depth, on the Use of DNA in Criminal Investigations in response to the Law Commission’s 367-page review on the topic.

Documents & Precedents Committee

Convened by Jacqueline Parker

The committee through its sub-committee formed to review the ADLS/REINZ Agreement for Sale and Purchase of Real Estate, continued the enormous task of comprehensively reviewing this document. The sub-committee received highly valuable input from the leading academic in the area and expert practitioners. Their contribution and support was significant in finally reaching the desired outcome releasing the 10th edition of the agreement on 27 November 2019. The committee also made good progress through another sub-committee on the full review of the ADLS Deed of Lease.

Employment Law Committee

Convened by Catherine Stewart

The committee continued to cultivate good working relationships with WorkSafe, the Privacy Commission, the Employment Court and the Employment Relations Authority by inviting them to committee meetings to engage in dialogue about various aspects of their area of law. It also continued to foster excellent collegiality and engagement through the highly-anticipated successful Employment Law Dinner and Burning Issues in Employment Law CPD event.

Environment & Resource Management Law Committee

Convened by Helen Andrews

The committee monitored significant policy developments during the course of the year and made valuable contributions through a number of submissions, including on the draft Terms of Reference for the Resource Management Review Panel, the Climate Change Response (Zero Carbon) Amendment Bill and the New Zealand Infrastructure Commission/Te Waihanga Bill. It also contributed articles to LawNews to inform the legal profession about developments in an area of law which is increasingly of public concern.

Immigration & Refugee Law Committee

Convened by Deborah Manning

The committee carried out a review of the Immigration Act 2009 and presented its report to the Immigration Minister at the ADLS Immigration Law Dinner. The intention of the review was to highlight deficiencies in the legislation and suggest areas for improvement, particularly around increasing access to justice in the immigration and refugee context.

The committee also had significant engagement with Government, including with Immigration New Zealand and the Refugee Status Branch, to resolve issues.

Property Law Committee

Convened by Bryce Town

The committee had significant engagement with Land Information New Zealand with regard to its Survey and Title Enhancement Programme (previously known as ASaTS and now known as STEP) which will progressively rebuild and modernise Land Information Platform Services over a five-year period. There was also engagement with the Overseas Investment Office on the practical implementation of overseas investment regulation parameters. Developments in the law were monitored and submissions made, including in relation to the Reform of the Overseas Investment Act 2005 (facilitating productive investment that supports New Zealanders’ wellbeing) and specific aspects of the Earthquake Commission Enquiry.

Technology & Law Committee

Convened by Lloyd Gallagher

The committee wrote to the Prime Minister to provide suggestions on social media regulation in light of the issues raised by the livestreaming of the terrorist shootings in Christchurch on 15 March 2019 through Facebook. Its letter, sent in anticipation of the Prime Minister’s Paris meeting where she was instrumental in forging an historic deal between 17 governments and eight tech giants, expressed concern about the approaches taken by some governments and offered the committee’s view on how more effective outcomes might be achieved. Whether by coincidence or otherwise, the outcome reflected a like-minded approach in the majority of recommendations adopted by the Prime Minister. The committee also wrote numerous articles to produce an impressive special 16-page technology edition of LawNews

Newly Suited Committee

Convened by Ellen Snedden

The committee held nine successful and well-attended events throughout the year and also wrote LawNews articles designed to engage with those who are relatively new to the legal profession with a view to encouraging their membership of, and involvement in, ADLS.

Family Law Committee

Convened by Stuart Cummings

The committee made comprehensive submissions on the Law Commission’s Review of the Property (Relationships) Act 1976. It also had regular representative attendance at Family Justice Sector Liaison meetings at the courts and monitored developments in the law, including the transition from the Domestic Violence Act to the Family Violence Act. It kept the legal profession updated through LawNews articles.

Health & Safety Law Committee

Convened by Fletcher Pilditch

The committee continued to monitor developments in the law and supported increased knowledge and awareness of legal issues in this area among the legal profession through LawNews articles and successful CPD events.

Mental Health & Disability Committee

Convened by Julian Hague

The committee monitored developments in the law and became involved in initiatives to inform and educate the profession and wider public on key issues, including in relation to the proposed referendum on the legalisation of cannabis and the increasing number of people deemed unfit to stand trial. It also contributed articles to LawNews on various mental health issues.

Trust Law Committee

Convened by Bill Patterson

The committee monitored the progression of the Trusts Bill through Parliament and its eventual passing into law as the new Trusts Act 2019.

It planned a series of CPD topics designed to inform the legal profession of the anticipated changes to be brought about by this legislation and steps practitioners need to carry out before the Act comes into force. It has also contributed numerous LawNews articles to inform the legal profession.

Civil Litigation Committee

Convened by Andrew Steele

The committee had a good level of communication with the Rules Committee throughout the year on various issues, including making submissions on the level of hearing fees regulations for civil cases, the reform of Rule 4.5.56 of the High Court Rules (concerning adding parties to legal actions), review of time allocations for trials and representative actions. It also had regular representative attendance at District Court liaison meetings.

Courthouse Liaison Committee

Convened by Chris Foote

The committee made a significant contribution through its submissions on the Courts Matters Act 2018. As many as 17 clauses or sub-clauses in the Court Matters Bill dealing with amendments to the Courts Security Act were made in a way that reflected the submissions made by the committee. It also continued to monitor and communicate with the courts on various operational and health and safety matters to ensure the courts remain an effective and safe working environment for practitioners.

Continuing

Professional

Development Committee

Convened by Geoff Hardy

Members of this committee shoulder a significant workload overseeing the quality and scope of ADLS CPD offerings. Further leadership, personal development, and skills workshops were developed and added to the CPD programme, which also incorporated a number of international speakers.

Members’ Special Fund Committee

Convened by Paul Collins

This committee provides financial assistance to lawyers facing particular hardship. The committee met as required to consider the provision of assistance to members seeking support.

Property Disputes Committee Convened by Mark Colthart

The committee continued to field various enquiries concerning property-related disputes. While those that progressed to full committee consideration and determination over this period were few in number, the good level of enquiries indicates that the work of the committee is well known and that it continues to serve as a meaningful alternative for parties negotiating towards resolution.

ADLS/REINZ Agreement for Sale and Purchase of Real Estate

ADLS is New Zealand’s leading provider of trusted legal forms and has been for more than three decades. ADLS offers in excess of 120 legal forms. The most prolifically used among them is the ADLS/REINZ Agreement for Sale and Purchase of Real Estate.

This year, a sub-committee of the Documents and Precedents Committee continued the enormous task of extensively reviewing the agreement. The new 10th edition, since released on 27 November 2019, is the culmination of significant input, time and expertise from the top legal minds in New Zealand. It follows a comprehensive examination of the agreement with considerable feedback and comments received from both the legal profession and the real estate industry. The Real Estate Institute of New Zealand, as joint copyright holder, also contributed its perspective and was represented on the sub-committee. The last full review of this agreement took place in 2012. Given the developments since then and the extensive nature of this review, a considerable number of changes have been made.

ADLS wishes to extend its gratitude and appreciation to the legal and tax experts, academics and those from the real estate industry who provided their invaluable input into this review. Their contribution and support was substantial. Recognition and appreciation are extended, in particular, to Tim Jones, Barrister (and Convenor of the sub-committee), Peter Nolan, Sole Practitioner (and lead drafter), Allan Bullot, National Leader – Indirect Tax, Deloitte, Dr Don McMorland, Barrister, Desmond Wood, Barrister, Nick Kearney, Principal, Schnauer & Co and Lisa Gerrard, Legal Counsel, REINZ.

Continuing Professional Development

Our flagship conferences, with highly relevant and thoughtprovoking content, continue to go from strength to strength, attracting excellent speakers and large audiences, at Cradle to Grave™ in Auckland and Christchurch, and at our Property Law Half-Day and SCA (NZ) Half-Day conferences.

We continued to focus on workshops and travelled around the country delivering the AML/CFT and Leading Your Career workshops in Hamilton, Wellington, Christchurch and Dunedin as well as Auckland.

We offered practitioners further opportunities to develop important skills with our Personal Effectiveness workshops, the fundamentals of effective communication in our Art of Communication workshops, as well as assisting practitioners to improve the efficiency and profitability of their practices with the Your Legal Business series. We launched a new CPD series – the Civil Litigation Series, to run along with our other popular series, the Commercial Law Series.

This year we were pleased to welcome a number of international speakers, including Professor Mansfield Mela, Psychiatry Clinical Professor and Professor Glen Luther of the College of Law both at University of Saskatchewan and renowned experts on the psycho-legal aspects of forensic mental health, with specific expertise in the area of fetal alcohol spectrum disorder (FASD). Our SCA (NZ) Half-Day Conference featured two speakers from Australia –Julie McLean, a Consultant with Body Corporate Consulting and Tim Graham, Partner, HWL Ebsworth Lawyers.

We have, again, witnessed the growth in our livestream audiences, as more practitioners opt to participate in ADLS CPD from the comfort of their offices. Our Continuing Professional Development Plan and Record service is a popular and convenient way to record and track CPD hours, as is our On Demand CPD, particularly towards the end of the CPD year, where those needing the odd hour or two are sure to find something interesting and relevant to meet their CPD obligations.

safe environment

The ‘Cross-Examination Workshop 2019’

Back row L-R: His Honour Judge Bergseng, his Honour Judge McNaughton, his Honour Judge Andrée Wiltens, Paul Dacre QC, Paul Borich QC and Rachael Reed QC

Front row L-R: Aieyah Shendi, Denise Wallwork, Ish Jayanandan, Marie Dyhrberg QC, Julie-Anne Kincade QC and his Honour Judge Sharp

The annual ‘Burning Issues Forum’ was held for its 18th time in 2019

L-R: Kylie Dunn, David France, his Honour Judge Perkins, Peter Cranney and Catherine Stewart, Convenor of the ADLS Employment Law Committee

Acknowledgements

ADLS wishes to thank our:

CPD Committee members who guide the development and planning of our highly respected programme; CPD presenters and chairs who generously share their time and expertise; and ADLS Members and lawyers who participate in our CPD activities and whose feedback helps to ensure our CPD programme maintains its excellent standards and accurately reflects the needs of the profession.

A

to practise our cross-examination skills.

Judicial Appointments

Our congratulations go to the following ADLS members who were appointed to the judiciary during the 12 months to 30 September 2019.

Š

Auckland Barrister Tracey Walker was appointed a Judge of the High Court and will sit in Auckland.

Justice Walker graduated with a BA and an LLB from the University of Auckland in 1988 and began her legal career at Simpson Grierson. In 1991 she obtained an LLM from the University of London, and returned to New Zealand, re-joining Simpson Grierson in 1992. Justice Walker became a partner of Simpson Grierson in 1997, spending 16 years as a litigation specialist in general dispute resolution and intellectual property, followed by three years as a consultant Special Counsel with a focus on media and intellectual property litigation. In January 2019 she joined the Auckland Bar, co-founding Sangro Chambers.

Š Wellington Queen’s Counsel David Goddard was appointed a Judge of the High Court and the Court of Appeal.

Justice Goddard graduated with a BA (Hons) in mathematics from Victoria University of Wellington in 1983, subsequently gaining a BA (Hons) in law in 1986 from Oxford University in England, where he studied as a Rhodes Scholar. Having lectured in law at Bristol University, Justice Goddard returned to New Zealand in 1988 to practise as a lawyer at Chapman Tripp. He was a litigation partner at that firm from 1991 to 1998, before beginning practice as a barrister sole in 1999. He was appointed Queen’s Counsel in 2003.

Justice Goddard has been a member of the Commonwealth Secretariat Arbitral Tribunal since May 2011, and Acting President of the Tribunal since February 2018. He has had extensive involvement in law reform in New Zealand and overseas, advising ministers and government agencies and representing New Zealand in bilateral and multilateral negotiations.

He is currently chairing a multilateral treaty process under the auspices of the Hague Conference on Private International Law, developing a convention on recognition and enforcement of judgments.

He was a Vice President of the Diplomatic Conference that adopted the Hague Convention on Choice of Court Agreements in 2003, and a member of the drafting committee for that Treaty.

Justice Goddard has more recently been undertaking research at New York University as a Senior Global Fellow from Practice and Government in the Hauser Global Law School.

Š

Auckland solicitor Melinda Dickey was appointed as an Environment Court Judge and District Court Judge to serve in Auckland.

Judge Dickey has been a partner at Brookfields Lawyers since 1996. She specialises in all aspects of resource management and environmental law. Since 2013 she has acted for Auckland Council providing advice and attending hearings on the Auckland Unitary Plan. This work has included various Environment Court and High Court proceedings. She also has extensive experience in advising on infrastructure projects and planning instruments for a number of local authorities.

Š

La-Verne King of Taemaro, Te Tai Tokerau was appointed as a District Court Judge in Northland, with jurisdiction as a Family Court Judge.

Judge King, whose iwi include Ngatikahu ki Whangaroa and Ngati Paoa, was admitted to the Bar in 1989. In 1994, along with Judge Ida Malosi and Ali’imuamua Sandra Alofivae, she established the first Māori and Pasifika women law firm, KAM Legal. Judge Sharyn Otene commenced her legal career there.

In 2007, Judge King returned to the Far North and went on to establish Doubtless Bay Law Ltd in response to the many and varied legal needs of the local community. She was appointed as Youth Advocate in 1992, Counsel for Child in 1994, District Inspector for Mental Health in 2003 and Visiting Justice in 2009. In August 2018, she was appointed a member of the Independent Panel considering the 2014 Family Justice Reforms.

ADLS Council

Tony Bouchier

President

Tony is currently on the Criminal Bar Association Committee (17 years), serving four years as President during a major transformation of the organisation. He is a past member of the Police Association, former director of Police and Families Credit Union, and served as chairman and member of many professional and community committees and charitable trusts.

Tony Herring

Tony is a Partner at Mortlock McCormack Law in Christchurch practising in the areas of Commercial and Property Law, with an emphasis on Commercial Leasing and Employment. He acts for a number of Crown clients as a member of the All of Government Property Law Panel and is a Notary Public for the South Island.

Craig Fisher

Craig is a consultant to the RSM New Zealand group and RSM Hayes Audit with over 28 years of public accountancy experience. He provides external audit, assurance, and risk management and governance advice across a diverse range of sectors. Craig has a significant interest and recognised expertise in not-forprofit and charitable organisations.

Chris Eggleston

Chris is a Barrister in Chancery Chambers, with over 25 years’ experience specialising in employment law. He was admitted in 1990 and is a longstanding member of ADLS.

Marie Dyhrberg QC

Vice President

Marie Dyhrberg QC is a senior barrister specialising in criminal law. Appearing regularly at the District Court, High Court and Court of Appeal in New Zealand she was appointed Queen’s Counsel in 2014. She has convened the ADLS Criminal Law Committee for many years. She is a former Chair of the Criminal Law Committee of the International Bar Association (IBA).

Ellen Snedden

Ellen is a Senior Solicitor at Simpson Western specialising in family law. Ellen serves on the ADLS Family Law Committee and has convened the ADLS Newly Suited Committee since its inception. She has also led the Future Leaders of West Auckland networking group for a number of years.

Michael Wallmannsberger

Michael is an experienced cybersecurity consultant and professional director, having held a variety of governance and security leadership roles. He is currently chair of the CERT NZ Advisory Board, a group of industry experts that advises the Government on the operation of New Zealand’s computer emergency response team (CERT), and Chief Information Security Officer at Air New Zealand.

Mary Anne Shanahan

Mary Anne is a sole practitioner who has worked for three decades serving the community of West Auckland. She is a member of the Broadcasting Standards Authority and a trustee of Odyssey House Trust.

Financial Statements

Approval of Annual Report 30

Independent Auditor’s Report 31

Statement of Financial Performance 34

Statement of Movements in Members' Funds 35

Statement of Financial Position 36

Notes to the Financial Statements 37

Approval of Annual Report

The Council presents the Annual Report including the Financial Statements of the Auckland District Law Society Incorporated for the year ended 30 September 2019.

Bouchier President

Dyhrberg QC Vice President

Tony

Marie

Independent Auditor’s Report

Grant Thornton New Zealand Audit Partnership

L4, Grant Thornton House 152 Fanshawe Street PO Box 1961 Auckland 1140

T +64 (0)9 308 2570 F +64 (0)9 309 4892 www.grantthornton.co.nz

To the Councillors of Auckland District Law Society Incorporated

Report on the Audit of the Financial Statements

Qualified Opinion

We have audited the financial statements of Auckland District Law Society Incorporated (the “Entity”) which comprise the Statement of Financial Position as at 30 September 2019, and the Statement of Financial Performance, Statement of Movements in Members’ Funds for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly in all material respects, the financial position of Auckland District Law Society Incorporated as at 30 September 2019, and of its financial performance and cash flows, for the year then ended, in accordance with A Special Purpose Financial Reporting Framework For Profit Entities (“The Framework”) issued by Chartered Accountants Australia and New Zealand.

Basis for Qualified Opinion

The Entity has land and buildings of $10,877,598 which are accounted for at fair value on the Statement of Financial Position as at 30 September 2019. We were unable to obtain sufficient appropriate audit evidence about the carrying amount of the land and buildings in as at 30 September 2019. Consequently, we were unable to determine whether any adjustments to these amounts were necessary.

We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued by the New Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Society in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Other than in our capacity as auditor we have no relationship with, or interests in, the Entity.

Chartered Accountants and Business Advisers Member of Grant Thornton International Ltd

Emphasis of Matter

We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared in accordance with A Special Purpose Financial Reporting Framework and, therefore, may not be suitable for another purpose. Our report is intended solely for the Entity and should not be distributed to or used by parties other than the Entity. Our opinion is not modified in respect of this matter.

Other Information

The Councillors are responsible for the other information. The other information comprises the information included in the Annual Report but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.

In connections with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Councillors’ Responsibilities for the Financial Statements

The Councillors are responsible on behalf of the Entity for the preparation and fair presentation of these financial statements in accordance with The Framework and for such internal control as those charged with governance determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, those charged with governance are responsible for assessing the Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Councillors either intend to liquidate the Entity or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of the auditor’s responsibilities for the audit of the financial statements is located on the External Reporting Board’s website at: https://www.xrb.govt.nz/standardsfor-assurance-practitioners/auditors-responsibilities/audit-report-8/

Restriction on use of our report

This report is made solely to the Entity’s members, as a body. Our audit work has been undertaken so that we might state to the Entity’s members, as a body, those matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Entity and its members, as a body, for our audit work, for this report or for the opinion we have formed.

Grant Thornton New Zealand Audit Partnership

Auckland 29 January 2020

Statement of Financial Performance

for the year ended 30 September 2019

Note 2019 2018 $ $

Total operating revenue 2 6,264,067 6,429,936

Total operating expenses 3 (5,904,190) (5,917,499)

Gross operating surplus 359,877 512,437

Impairment of restaurant assets 6 (400,130)Restaurant fit-out and assets received 6 - 612,142

Lease inducements written off 7 - (360,000)

(Deficit) surplus for the year before taxation (40,253) 764,579

Taxation 9 (87,971) (197,122)

Net (deficit) surplus for the year after taxation (128,224) 567,457

This statement is to be read in conjunction with the notes to the financial statements.

Statement of Movements in Members' Funds

for the year ended 30 September 2019

In New Zealand dollars

Net (deficit) surplus after taxation (128,224) 567,457

Total recognised revenues and expenses (128,224) 567,457

Members’ funds at beginning of year 10 15,008,496 14,441,039

Members’ funds at end of year 10 14,880,272 15,008,496

This statement is to be read in conjunction with the notes to the financial statements.

Statement of Financial Position

2019 2018

Assets $ $

Stock – legal forms & books 24,194 28,799

Goods and services tax 12,732 -

Taxation 9 70,732 -

Prepayments & other debtors 60,050 75,695

Debtors 4 559,443 458,250

Cash and deposits 5 3,554,850 3,340,327

Total current assets 4,282,001 3,903,071

Property, plant and equipment 6 11,554,617 12,105,102 Lease inducements 7 35,625 51,458

Total non-current assets 11,590,242 12,156,560

Total assets 15,872,243 16,059,631

Liabilities

Trade creditors 374,224 312,001

Other creditors and accruals 109,961 141,146

Employee entitlements 129,208 137,982

Income received in advance 8 378,578 314,120 Goods and services tax - 41,333

Taxation 9 - 104,553

Total current liabilities 991,971 1,051,135 Total liabilities 991,971 1,051,135

Members’ funds

Accumulated funds 10 6,355,011 6,583,235

Asset revaluation reserve 10 7,925,261 7,925,261

Long-term property maintenance reserve 10 600,000 500,000

Total members’ funds 14,880,272 15,008,496

Total members' funds and liabilities 15,872,243 16,059,631

This statement is to be read in conjunction with the notes to the financial statements.

Tony Bouchier President

Marie Dyhrberg QC Vice President

Notes to the Financial Statements

for the year ended 30 September 2019

1. Significant accounting policies

Reporting entity

The Auckland District Law Society Incorporated (the Society) is a professional body representing the interests of its members and the legal profession in New Zealand. The Society is constituted under the Incorporated Societies Act 1908 with an effective commencement date of 1 February 2009.

The activities of the Auckland District Law Society were incorporated into the Society on 1 February 2009. Under the requirements of the Lawyers and Conveyancers Act 2006 the activities of the Auckland District Law Society were required to be incorporated when the Council resolved not to join the New Zealand Law Society. All of the assets and liabilities of the Auckland District Law Society that were not transferred to the New Zealand Law Society were transferred to the incorporated Society from 1 February 2009.

The Society is not required to prepare general purpose financial reporting under any legislation or founding constitution. Accordingly, in the absence of a special purpose framework for not-for-profit entities, the Society has voluntarily elected to adopt a Special Purpose Financial Reporting Framework for use by for-profit entities issued by Chartered Accountants Australia and New Zealand.

Measurement basis

The measurement base adopted is that of historical cost, with the exception that certain fixed assets are carried at valuation. Reliance is placed on the fact that the entity is a going concern. Revenue earned is matched with expenses incurred using accrual accounting concepts.

Specific accounting policies

(a) Property, plant & equipment

The Society has five classes of fixed assets:

Land

Buildings & alterations

Furniture

Equipment

Library books

All items of property, plant and equipment are initially recorded at cost, including costs directly attributable to bringing the assets to their working condition. Freehold land and buildings are revalued to fair value at least every five years by an independent valuer. Library books are revalued to fair value at least every five years.

Revaluations are recognised in an asset revaluation reserve for that class of asset within general reserves. If any revaluation reserve has a deficit, that deficit is recognised in the statement of financial performance in the period it arises. In subsequent periods any revaluation surplus that reverses previous revaluation deficits is recognised as revenue in the statement of financial performance.

(b) Depreciation

Depreciation is provided for on a straight-line basis on all property, plant and equipment items at rates calculated to allocate the asset’s cost or valuation less estimated residual value, over the estimated useful lives. When an asset is revalued, the depreciation charge is calculated on that revalued amount from the date of revaluation.

The principal rates are:

Land 0 %

Buildings & alterations 3 - 40 %

Furniture 6 - 21 % Equipment 8 - 67 % Software 40 % Library books 0 %

(c) Amortisation

Amortisation is provided for on a straight-line basis over the lease inducements paid. The periods are determined by the original lease agreement term.

(d)

Stocks – legal forms & books

Stocks – legal forms & books inventories have been valued at the lower of cost, determined on a specific identification basis, or net realisable value after due allowance for damaged and obsolete stock.

(e) Debtors

Debtors are stated at their cost less an allowance for any uncollectible amounts.

(f) Income taxation

The Society is a not-for-profit organisation and is not liable for income tax on income relating to membership activities. The Society is subject to income tax on activities outside the circle of membership. The Society accounts for taxation using the taxes payable method. Deferred tax is not accounted for.

Notes to the Financial Statements (continued)

for the year ended 30 September 2019

(g) Goods and services tax

The financial statements have been prepared on a GST exclusive basis except for Debtors and Trade Creditors, which are shown inclusive of GST.

(h) Leases

The Society leases office equipment. Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are recognised in the determination of the operating surplus in equal instalments over the lease term.

(i) Revenue

Membership levies are recognised over the period in which they are active. Sales of goods are recognised when they have been ordered and delivered to the customer. Sales of services are recognised on the date the service takes place. Interest income is recognised using the effective interest method. Rent income is recognised on a straight-line basis over the life of the lease.

(j) Financial instruments

Financial instruments include debtors, creditors, cash balances and deposits. Financial instruments are stated in the Statement of Financial Position when the entity becomes party to a financial contract. Debtors are stated at their cost less impairment losses.

(k) Cash and equivalents

Cash and cash equivalents comprise cash on hand, cash in banks and cash deposits in banks.

(l) Long-term property maintenance reserve

The long-term property maintenance reserve was established to allow for major items of property maintenance. It is based on a 15-year-long term maintenance report prepared by Opus in 2015.

(m)

Assets reviewed for impairment

Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount of an asset is defined as the fair value less cost to sell.

(n) Change in accounting policies

There have been no changes in the accounting policies in the current period.

(o) Reclassification of comparative numbers

There is a reclassification of comparative figures on the Statement of Financial Performance to better represent the financial results of the current year. The reclassification of the components has no impact on tax.

Notes to the Financial Statements

for the year ended 30 September 2019

2. Operating revenue

(continued)

2019 2018

Operating revenue comprises: $ $

Membership levies 825,756 795,815

Interest income 103,184 92,397 Rent income 519,259 647,688 Other service income 4,815,868 4,894,036

Total operating revenue 6,264,067 6,429,936

Other service revenue includes commercial and non-commercial activity including continuing professional development, legal forms, New Zealand Lawyers Directory sales, book sales, collegial events, sponsorships, property operating expense recovery (Opex), LawNews subscribers, will enquiries and advertising.

3. Operating expenses

2019 2018

Operating expenses include: $ $ Audit fees 17,350 16,500 Bad and doubtful debts (recovery) expense (3,451) 7,292

Depreciation

Building & alterations 97,997 65,064 Furniture 13,046 12,574 Equipment 284,001 450,953 Total depreciation 395,044 528,591

Amortisation on lease inducements 15,833 42,083 Donations & community services 12,925 11,743 Equipment rental 8,593 47,406

Salaries & wages 2,033,197 2,144,803

4. Debtors 2019 2018 $ $

Debtors 584,265 487,095

Less: Allowance for doubtful debts (24,822) (28,845) 559,443 458,250

Notes to the Financial Statements

for the year ended 30 September 2019

5. Cash and deposits

(continued)

Bank accounts and deposits are held with major New Zealand trading banks with Standard & Poor’s credit ratings of AA-.

6. Property, plant and equipment

At valuation

Cost or Valuation

2019

Accumulated Depreciation / Impairment Carrying value

$ $ $

5,490,000 - 5,490,000 Buildings 6,118,195 730,597 5,387,598 Library books 75,612 14,843 60,769

Land

At cost

Furniture 154,649 35,332 119,317 Equipment 2,150,298 1,653,365 496,933 13,988,754 2,434,137 11,554,617

2018

At valuation

Cost or Valuation

Accumulated Depreciation / Impairment Carrying value $ $ $

Land 5,490,000 - 5,490,000 Buildings 6,072,676 236,961 5,835,715 Library books 75,612 14,843 60,769

At cost

Furniture 139,503 22,286 117,217 Equipment 1,982,316 1,380,915 601,401 13,760,107 1,655,005 12,105,102

Chancery Chambers is a Schedule B Heritage Building which imposes certain obligations under the Auckland Council Plan. The Chancery Chambers building and land was valued for accounting purposes on 22 September 2015 by T L Esplin at Telfer Young (Auckland) Limited, an independent registered valuer, at $10,500,000. A registered first mortgage is held over the Chancery Chambers property to secure the unutilised bank overdraft facility. A valuation as at 30 September 2019 was unable to be obtained due to reasons set out in note 14.

At 1 May 2018, a settlement agreement provided for ADLS to take over the unencumbered ownership of the restaurant fit-out and assets valued at $612,142. At 30 September 2019 an impairment to the value of the fit-out assets of the restaurant has been assessed and recorded at $400,130. The remaining book value of the restaurant assets as at 30 September 2019 is $92,101.

Notes to the Financial Statements

for the year ended 30 September 2019

7. Lease inducements

2019

Cost Amortisation Carrying value $ $ $

Lease inducements 95,000 59,375 35,625 2018

Cost Amortisation Carrying value $ $ $

On 1 May 2018 the remaining balance of the lease inducement relating to the restaurant of $360,000 was written off due to the conditions set out in a settlement agreement between the restaurant owners and ADLS. See note 6 above.

8. Income received in advance

Lease inducements 95,000 43,542 51,458 2019 2018 $ $

For future Membership fees 283,177 267,356

For future CPD events 14,905 31,330

For future collegial events 15,182 7,245

For future rooftop hire events 4,310 6,760

For future rentals and Opex 54,904 1,429

For future NZLD subscriptions 6,100378,578 314,120

The Society receives monies in advance of an event or product being available. This is recorded as a liability until performance of that event has taken place or delivery of that product has been completed.

9. Taxation

2019 2018 $ $

Income taxation due on net non-membership income 87,971 197,122

Provisional tax payments made during the year (124,520) (73,332) RWT paid during the year (34,183) (19,237)

Total taxation (receivable) payable (70,732) 104,553

The Society’s 2019 non-taxable membership income represented 13.2% (2018: 12.4%) of total operating revenue. A calculation using this percentage determines non-deductible expenditure. Total net taxable income in 2019 was $317,813 (2018: $707,558).

Notes to the Financial Statements

for the year ended 30 September 2019

10.

Movements in Members' funds 2019

Accumulated Funds Asset Revaluation Reserve

Long-Term Property Maintenance Reserve Total

Opening balance 6,583,235 7,925,261 500,000 15,008,496

Recognised deficit (128,224) - - (128,224)

Transfer between reserves (100,000) - 100,000Balance at end of year 6,355,011 7,925,261 600,000 14,880,272

2018

Accumulated Funds Asset Revaluation Reserve

Long-Term Property Maintenance Reserve Total

Opening balance 6,115,778 7,925,261 400,000 14,441,039

Recognised surplus 567,457 - - 567,457

Transfer between reserves (100,000) - 100,000Balance at end of year 6,583,235 7,925,261 500,000 15,008,496

11. Commitments

Capital expenditure commitments: the Society had $259,852 of commitments at 30 September 2019 for completion of system enhancement projects, maintenance works and services, and books ordered (2018: $4,000).

Operating lease expense commitments under non-cancellable operating leases: 2019 2018 $ $

Operating lease expense commitments are for photocopiers in 2019 and in 2018 computer equipment and photocopiers.

Landlord operating lease payments receivable under non-cancellable operating leases:

Not later than one year 15,360 24,543 One to two years 11,533 18,702 Two to five years - 13,248 26,893 56,493 2019 2018 $ $

Not later than one year 398,355 348,043 Later than one year 340,184 578,478 738,539 926,521

Notes to the Financial Statements

for the year ended 30 September 2019

12. Financial instruments

Credit risk

The Society is party to the following financial instruments: Cash, Deposits, Debtors, Prepayments, Creditors and Accruals. The financial instruments which potentially subject the Society to credit risk principally consist of Cash, Deposits and Debtors. The maximum exposure to credit risk is:

2019 2018 $ $

The fair value of the financial instruments is their carrying value as shown in the Statement of Financial Position. No collateral is held on the above amounts.

Concentrations of credit risk

The Society is not exposed to any concentrations of credit risk, as the cash and deposits are made with a number of registered banks.

Credit facilities

The Society has a total bank overdraft facility of $100,000 (2018: $100,000). Of this, none has been utilised by the Society at balance date. ASB Bank Limited holds a registered mortgage over the Society’s building, Chancery Chambers, at 2 Chancery Street in regards to this facility agreement.

Interest rate risk

The Society is exposed to interest rate risk in that future interest rate movements will affect the returns earned and the cash flows on short-term bank deposits and the interest paid on bank debts.

13. Related parties

There are transactions between the Society and its Members in the normal course of business. The following persons were members of the Council as at 30 September 2019: Tony Bouchier, Marie Dyhrberg QC, Chris Eggleston, Craig Fisher, Tony Herring, Mary Anne Shanahan, Ellen Snedden, Michael Wallmannsberger.

The following persons were members of the Council during the financial year and retired or did not have terms renewed at the March 2019 AGM: Joanna Pidgeon, Stephanie Nicolson, Bernard Smith.

Cash and deposits 3,554,850 3,340,327 Debtors 559,443 458,250 4,114,293 3,798,577 2019 2018 $ $

President’s honorarium 111,720 111,020

Non-lawyer Council members’ remuneration 30,000 28,750

President’s expenses 5,675 4,913

Council members’ expenses 8,569 9,188

Council members’ expenses are primarily for non-Auckland members’ travel and accommodation whilst engaged on Council business.

Notes to the Financial Statements

for the year ended 30 September 2019

14. Contingent liability

Subsequent to 30 September 2019, a detailed seismic analysis of Chancery Chambers, undertaken at Auckland District Law Society Incorporated Council’s instigation, has classified it as an earthquake-prone building under the Building Act 2004. As per the Building Act 2004, Auckland is classified as a low-risk zone and as such all required seismic restraint work should be completed within 35 years of receiving an earthquake-prone notice from Auckland Council. The full extent of costs required to complete the seismic strengthening within the next 35 years is not yet known to Auckland District Law Society Incorporated but is believed to be significant (2018: $Nil).

15. Events after balance date

There were no events occurring after balance date that impact on these financial statements (2018: Nil).

16. Funds administered by the Society

These funds are administered by and do not belong to the Society and as such have not been recognised in these financial statements.

Members’ Special Fund

The Members’ Special Fund is held by a separate trust and is not available for the Society’s general operating purposes. Its use is restricted to specified purposes and the funds are controlled by a committee separate to the Council of the Society. 2019 2018 $ $

Balance at beginning of period 360,534 356,020

Interest received, net 3,720 3,737 Grants paid (10,156)Recovery 845 845 Write-offs (47) (13,114)

Changes to provision for bad debts 9,916 13,114 Expenses (59) (68) Balance at end of year 364,753 360,534 2019 2018 $ $

Members’ Special Fund bank account 364,753 350,902

Net loans to members after provision for doubtful debts - 9,632 Balance at end of year 364,753 360,534

AUCKLAND DISTRICT LAW SOCIETY INC

2 Chancery Street Auckland 1010

Chancery Chambers