LawNews- Issue 1

The unintended consequences of THE

Contents

LawNews is an official publication of Auckland District Law Society Inc. (ADLS).

Editor: Jenni McManus

Publisher: ADLS

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Cover: DebraLee Wiseberg / Getty Images

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How the unintended consequences of the CCCFA are playing out

Reweti Kohere

Even if the government moves to claw back some of the more draconian provisions of the Credit Contracts and Consumer Finance Act 2003 (CCCFA), the good old days of relaxed assessments and easy access to mortgage money from our major banks are well and truly gone.

Mortgage brokers say approval processes for loan applications are likely to remain tight, regardless of whether the tough personal liability provisions for bank directors introduced in December 2021 are removed from the legislation. These provisions are widely viewed as being the driver behind the banks’ current hard line on lending and high rejection rate of would-be borrowers.

Brokers spoken to by LawNews say that since the controversial changes to the CCCFA in 2021, some banks have now invested heavily in automated assessment and approval processes to streamline lending, suggesting they have accepted the new lending parameters as being here to stay.

But brokers caution that not all blame for the high rejection rate of mortgage applications can be sheeted home to the CCCFA. Also feeding into the mix is the rapidly rising cost of living which is forcing mortgage-seekers to tighten their belts. And alongside the new affordability regulations and high interest rates, high living costs mean applicants must demonstrate their ability to service mortgages that are stress-tested by the banks at much higher rates than a year ago.

The government is investigating other measures to claw back some of the unintended consequences that have flowed from the late 2021 CCCFA amendments. Expected to come into force in March, the new rules will further clarify which expenses banks can take into account when assessing affordability. However, the option to soften the penalties and liability regime for bankers has been ruled out.

“We’re all sitting now on tenterhooks waiting until March, hoping they use some common sense and repeal most of what they’ve done or scrap it altogether and start from scratch,” says Loan Market mortgage broker Bruce Patten. “Whether they will, I can’t see it.”

‘Reasonable’ buffer

Part of that lies with what the responsible lending code is designed to do, says Catalyst Financial managing director Peter Norris. Introduced in 2015, the code builds on the CCCFA by helping lenders comply with their obligations, ultimately ensuring

borrowers aren’t taking on debt they can’t actually pay off.

The recent CCCFA rules were enacted largely to protect people from high-interest loan sharks and payday lenders by prescribing what they and other kinds of lenders must require when assessing credit applications.

That includes probing applicants’ financial resilience, partly by looking at three months’ worth of expenses and comparing future expenses against statistical benchmarks to see whether they can withstand further interest rate hikes. However, what a “reasonable” buffer means has been left to lenders’ interpretations.

Moreover, the Act effectively raises the risk of legal action against directors and senior managers of lending companies if they preside over irresponsible or deficient lending. Personally liable now, top brass face pecuniary penalties of up to $200,000 and/or courtordered damages or compensation.

In early 2022, the government announced an investigation into the impact of the changes to the CCCFA due to widespread concern.

By the middle of last year, further changes were implemented that focused on addressing interpretational issues, such as by clarifying when lenders can ask how borrowers’ spending behaviours may change if their mortgage is approved and removing savings and investments as examples of outgoings that lenders must inquire into. Cabinet is expected to decide on a second round of changes in early February.

Overly cautious

New Zealand Bankers’ Association (NZBA), a lobby group representing the country’s banking industry, supported imposing due diligence duties and some form of penalty on directors and senior managers.

However, in a submission on the proposed CCCFA amendments to Parliament’s finance and expenditure committee, the association said any consequences must be “suitable and proportionate” –which the rule changes weren’t.

The association noted the CCCFA risked being “significantly” out of step with comparable overseas regimes that didn’t impose personal liability or forbid indemnities and insurance for civil pecuniary penalties. And the Act could discourage otherwise qualified candidates from accepting more senior roles, given the

Continued on page 04

There’s a middle ground where responsible lending can play a really important role but borrowers can still get money

Bruce Patten

Continued from page 03

consequences for making mistakes.

As a result of the 2021 amendments, banks have become overly cautious in the face of stiffer legal obligations and have tightened their lending processes more than what lawmakers anticipated.

Mortgage Lab spokesperson Rupert Gough says that reaction is understandable “because the directors of the bank can’t control someone seven management layers down”. The banks don’t want to be perceived as lending recklessly either, and will be hesitant about loosening their policies. “Until the CCCFA is amended to relieve the main banks of that burden, they aren’t going to walk that back. It’s just too risky.”

‘Complete joke’

Those at the coalface of assessing lending applications might have a different attitude.

Norris says frontline bankers, brokers and assessors are the ones most significantly affected by change and they’d most likely want affordability regulations softened. “Unfortunately, those are the people who really have no say in terms of policy.”

Loan Market’s Patten believes the banks will “jump all over” any changes that ease their increased workloads. “They’re all in total agreement the changes are a complete joke and make their jobs extremely time-consuming and difficult,” he says, adding more harm than good is being done.

“Really good clients are not able to borrow simply because of a change in the way the banks have to approach something.”

Patten argues the sooner that significant changes are made, the better. “I’m absolutely convinced the banks will follow through and make changes straight away.”

has swung in the other direction to an extreme degree. “What we’ve actually ended up with is having to do a hell of a lot of work to essentially get the same result.”

Hastie describes the Act as a “sledgehammer cracking a nut”. The protection the CCCFA amendments purportedly offers isn’t needed for prospective homeowners or investors, whom the banks were already treating responsibly, he says.

In one respect, Hastie welcomes the recent CCCFA rules as they establish a standard of stringency he and his Orewa team have followed for several years in screening applications just as rigorously as the banks do. By revealing potentially problematic spending habits, brokers offer solutions “so that you can then say to the bank ‘here’s what we’ve found, here’s what the customer’s going to do about it, now approve that loan’.”

But Hastie acknowledges the amendments make it much harder for people to borrow, a change further compounded by the rise in interest rates.

Norris, from Catalyst Financial, agrees: “It just so happens they happened at the same time.”

The stats

According to statistics collected by the Reserve Bank, credit is still flowing, even if access has tightened. New lending totalled $5.1bn at December 2022, down 15% from the previous month and nearly a third from December 2021. In December 2020 – a year before the CCCFA amendments came into force – all borrowing totalled almost $10b. Within one month of the changes, total lending fell 70% to $4.7b.

Peter Norris

In a Cabinet paper issued mid-2022, Commerce and Consumer Affairs Minister David Clark noted he wouldn’t explore the option of relaxing the liability settings, which the Ministry of Business, Innovation and Employment had recommended to remove some of the unintended consequences.

While changing the liability regime would open up access to credit and encourage less-cautious interpretations of the rules, it would “disincentivise compliance…and reduce consumer protection”, Clark said.

New mortgage commitments for first-home buyers in that one-month period nearly halved, from $1.6b in December 2021 to $819m in January 2022. By year’s end, lending to first-home buyers recovered to $1.2b. Investors also suffered an immediate fall of 60% in the month following the amendments, from $1.3b in December 2021 to $811m. By the end of 2022, lending to investors increased only $100m.

Rupert Gough

If elected in October, National has promised to exclude the major banks from the CCCFA while it crafts a better law. A year ago, Opposition Housing spokesperson Nicola Willis and Commerce and Consumer Affairs spokesperson Andrew Bayley wrote to the minister, urging him to adopt National’s proposed Bill. This would amend the regulation-making powers of the CCCFA to enable regulated financial institutions, including the major banks, to apply appropriate discretion over their lending decisions.

“There is a categorical difference between regulated financial institutions issuing long-term mortgages at low interest rates and other types of higher-risk, shorter-term loans issued by other lenders for different purposes,” Bayley said. “This Bill would require the minister to take their differing scale and risk profiles into account when setting regulations for their lending activity.”

Hastie Mortgages owner Campbell Hastie says the pendulum

In the past year, the official cash rate has risen steeply to 4.25% from December 2021’s figure of 0.75%. At the same time, and just as quickly, banks have increased interest rates, with the average floating rate hitting nearly 8% and rates fixed for less than three years set anywhere between 6.85% and 7.07%.

Open banking

The more onerous, prescriptive CCCFA and responsible lending code have arisen as the local banking industry takes tentative steps toward a more open future.

“Open banking”, where banks make client and transaction data available to other financial service providers to unlock better deals for consumers, is set to arrive in New Zealand by 2024. In the past three years, the government has created the foundation by establishing a consumer data-rights framework, allowing people to securely share data held about them with trusted third parties, and by agreeing to explore banking as a test-case.

Continued on page 05

We’re all sitting now on tenterhooks waiting until March, hoping they use some common sense and repeal most of what they’ve done or scrap it altogether and start from scratch

Continued from page 04

Already in use in the UK and Europe, open banking could usher in a raft of new financial services while putting pressure on banks to improve their offerings. For instance, customers looking for a new credit card could let a financial advice service analyse their transaction history and spending habits, assess that information against credit card offers from banks and return recommendations tailored to their circumstances.

But open banking comes with risks, including the threat of cyberattacks and privacy breaches, the extent of consumer adoption and an increasing reliance on the big tech industry. Other concerns, gleaned from a recent investigation by the UK Competition and Markets Authority, include corporate governance failures, the late delivery of data and how conflicts of interest are managed.

Automation

Helping drive open banking is artificial intelligence, automation and analytics and at least one New Zealand bank has jumped on board.

In early 2021, ANZ signed a “strategic AI deal” with UK-based fintech firm Bud to build a simpler, more transparent lending process. It followed Bud’s $20 million capital raise in 2019, in which ANZ as well as the likes of Goldman Sachs and HSBC participated.

Acknowledging the move was partly driven by changes to the CCCFA, which would add significant manual overhead to lending decisions, ANZ said it chose to automate aspects of its process. In using Bud’s tools, the bank can ingest and categorise income and expenses data from applicants’ banks statements, and receive summaries to help determine applications.

ANZ NZ chief information officer Mike Bullock at the time said its new functionalities meant the bank could keep meeting its responsibilities under the Act, “without unnecessarily slowing down the lending process”.

An ANZ spokesperson declined to comment further on its investment in Bud, citing commercial confidentiality. But the spokesperson says the bank continues to provide feedback on how the categorisation tool can be better enhanced. “Given the significant number of lending applications our staff handle, reviewing 90 days [of] transaction records, sometimes over multiple accounts, to capture and categorise the extensive list of expenses solely manually was impractical,” the representative says.

“Carefully assessing suitability and affordability when making decisions around lending is a fundamentally important part of our role as bankers. At the heart of that is the need to balance convenience with protection.”

Grey areas

One mortgage broker spoken to by LawNews paid to trial the same platform as ANZ was using (without the bank’s customisations) for three months. But the tool wasn’t perfect, the broker says – it recognised data only in specific formats and some manual inputs remained. “What we were originally led to believe in terms of the useability wasn’t the case in terms of the actual capability.”

Another broker described Bud as “buggy”, saying it was a band-aid before open banking arrives. “There’s no digital transfer of information. It’s basically an OCR [optical character recognition] reading of a PDF statement and automatic categorisation.” A spokesperson for Bud declined to comment.

Gough says lending processes are nowhere near as automated as the current state of technology might suggest. But lenders and mortgage brokers also don’t want to lose the ability to deal with the grey areas of credit applications. “If you’ve got a blip on your credit record, they want to know why because they’re still in the business of making money,” Gough says. “So if they can mitigate risk, then they will. And an automated system can’t do that.”

A successful pairing of AI and human discretion could take the form of technology sweeping through applications to identify potential red flags, which are then escalated to credit teams for a decision. Until then, the human element of lending processes mustn’t disappear, Norris says. “There’s a middle ground where responsible lending can play a really important role but borrowers can still get money.”

‘Can they?’

Tighter lending assessments mean prospective homeowners are tightening their spending to reduce the risk of lenders declining their mortgage applications.

There’s nothing wrong with that approach, Hastie says. But the reality is that people won’t fully curb their expenditure. “They’re still going to have a little bit of fun because otherwise life would be pretty boring. You can’t live on baked beans all your life.”

Gough says applicants, tested at a 9% interest rate, are technically over-proving themselves to get a mortgage set at 6.5%. “That is a good exercise for people to be doing…the test has to be ‘can they’? That is part of responsible lending.”

But with the CCCFA set in stone, all parties must get used to their new lending environment. Norris adds: “Whether we’re going to suddenly wake up and the government is going to change things that means lending is really easy, I don’t think that’s going to happen. I don’t think lending is going to get any easier.” ■

Until the CCCFA is amended to relieve the main banks of that burden, they aren’t going to walk that back. It’s just too risky

Campbell Hastie

The duty of a trustee not to self-benefit

Anthony Grant

A few days before Christmas, the Court of Appeal released its decision in Legler v Formannoij [2022] NZCA 607.

It is one of the more interesting decisions delivered on New Zealand trust law in 2022 and concerns the rights of a human trustee (Maria Legler) to form a corporate trustee which she would use to remove the other beneficiaries and appoint all of the trust’s assets to herself.

The trial judge, Justice Mathew Downs, held that Legler was permitted to form the corporate trustee of which she would be its sole director and to act as she did. Two of the judges in the Court of Appeal (Brown and Brewer JJ) agreed with him. The third judge, Justice Helen Cull, forcefully dissented.

The Deed of Trust contained a clause appearing to give express authorisation to the creation of a corporate trustee by which a beneficiary could control the trust. It is clause 27.2 (c):

“It is expressly declared [that] a corporate trustee may exercise all the powers and discretions vested in that Trustee by this deed and by law notwithstanding such exercise may in any way directly or indirectly benefit any beneficiary who has any interest… in that Trustee whether as director, officer, shareholder or otherwise however.”

When a trust has a clause which appears to give express permission to a beneficiary to create and control a corporate trustee, it is not surprising that the trial judge and some judges in the Court of Appeal should say Legler was entitled to do what she did.

Clause 27.2 (c) is not written as clearly as it might have been. From a practitioner’s point of view, the most important aspect of this case is whether clause 27.2 (c), had it been worded with greater clarity, would allow beneficiaries generally to control trusts via corporate trustees of which they are its sole director.

Maria Legler was the second wife of Ricco Legler and, as often happens in such situations, her relationship with the children of her husband’s first marriage had its difficulties. The children said her actions in creating the corporate trustee which she controlled constituted a fraud on a power. That pejorative term is now being replaced by a new terminology. Instead of saying it was “a fraud on a power” for her to have used the power in the way she did, it is said her actions were contrary to “the proper purpose” of the power, meaning her actions had led to an invalid outcome.

The claim that her actions were a fraud on a power or a

breach of the proper purpose of her powers was rejected.

The hearing in the Court of Appeal was side-tracking to some extent by a dispute about the ambit of the children’s appeal. Their counsel sought to argue that Maria Legler’s actions were ultra vires but they had not pleaded such a claim and the court was not willing to allow the appeal to be advanced on that basis.

Even so, Brown and Brewer JJ said had they allowed the step-children to contend that Maria Legler’s actions were ultra vires, their contention would have failed as a result of the reasoning the High Court of Australia gave in the Montevento litigation where it had permitted a trust to be managed by a beneficiary who controlled a corporate trustee.

In Montevento Holdings Pty Ltd v Scaffidi Trust [2012] HCA 48, the relevant Deed of Trust contained a clause saying“[i]f… any individual appointor is a beneficiary that individual shall not be eligible to be appointed as a Trustee”.

A corporate trustee was appointed as the sole trustee of the trust and a beneficiary was its sole director and shareholder.

The trial judge said the Deed of Settlement “draws a clear distinction between individuals and corporations [and] recognises that a corporation may be a Trustee … and contains no actual or implicit prohibition upon the corporation, even if controlled by a beneficiary, from being such Trustee. Because the corporation is distinctly and legally separate from the individual, I do not consider that the prohibition in the Deed of Settlement against an individual beneficiary being a Trustee prohibits the appointment of [the corporate Trustee] …”

Justice Cull’s dissent in the Legler appeal is lengthy and relies on factual evidence that is not recorded in either Justice Downs’ decision or that of Justices Brown and Brewer. Her reasoning deserves consideration by a higher court.

Any further consideration of the case should take account of s 31 of the Trusts Act 2019 which says “A Trustee must not exercise a power of a Trustee directly or indirectly for the Trustee’s own benefit.” But that duty is described in the Act as a “default duty” which can be removed from a trust.

That being so, it is implicit that Parliament contemplated that a trust deed can expressly authorise a trustee to be able to self-benefit from a trust. The Legler decision is therefore primarily of interest in cases where the duty not to self-benefit remains as a term of a trust. ■

Anthony Grant is an Auckland barrister and trustee who specialises in trusts and estates ■

It is implicit that Parliament contemplated that a trust deed can expressly authorise a trustee to be able to self-benefit from a trust

Anthony Grant

New Year resolutions for property lawyers

Thomas Gibbons

January is traditionally a time of new year’s resolutions and somewhere between February and April is traditionally the time for giving up on them. While there are mixed views on how successful new year’s resolutions are likely to be, let’s have a go at some desired outcomes for property law in 2023.

■ Subdivision reform. We can anticipate that the Resource Management Act (RMA) will be replaced by the Natural and Built Environments Bill during 2023. However, the NBE Bill largely replicates provisions in the RMA, including some that are road blocks to efficient development and the enigmatic s 225 of the RMA. Let’s have a closer look at how the law relating to subdivision can be improved, not just carried forward.

■ Cross-lease reform. While we’re looking at subdivisions, let’s take a closer look at cross-leases as well. The impacts of this DIY type of title in New Zealand have been, well, catastrophic. The call for

reform was started by the Law Commission as long ago as 1999. Let’s conclude the debate and fix things up.

■ Covenant reform. Covenants have spread far and wide across our land law system and we need to remember that (a) New Zealand has a very enabling covenant regime by international standards and (b) covenants aren’t contracts – they’re mechanisms for the private regulation of future land use.

■ Covenants and public policy. While we’re looking at covenant reform, a particular area of attention is the ability to set covenants aside for being contrary to public policy. To date, this test has been treated narrowly and needs to be considered much more broadly. Any covenant that cuts across what the law otherwise does or enables should be open to challenge and considering how the policy of the RMA (enabling housing) amendments to enable more housing intensification is a useful place to start.

■ Tidying up titles. Our records of title are getting more and more complex. There need to be simpler and easier mechanisms to remove out-of-date or redundant memorials from titles – starting, perhaps, with memorials relating to Part IV of the Conservation Act and then extending to repetitive covenants and other matters. Indefeasibility is one thing but getting rid of redundant memorials should be enabled in the interests of an efficient title system.

■ An updated REINZ-ADLS Agreement for Sale and Purchase. Well, that one I can help with. Watch this space!

I could go on. It’s an election year and unfortunately property law is unlikely to excite voters. But property law affects us all and there are obvious areas for improvement.

“Better property law for better communities” as a political slogan, perhaps?

Thomas Gibbons is a specialist property lawyer and a director of Thomas Gibbons Law ■

Not those kind of men

Chris Hipkins’ installation in the Prime Minister’s office is not a response to Labour’s economic policies. Rather, it is a response to Labour’s extraordinary mishandling of cultural policy, most particularly those policies relating to te Tiriti o Waitangi

It is easy to brush off Jesson’s challenge by asserting that Christopher Luxon and his colleagues are perfectly capable of doing both: that what is good for capitalists is, ipso facto, good for capitalism.

Except this claim is obviously false. The Jacinda Ardern-led Labour Party, by introducing the wage subsidy scheme to blunt the worst effects of the covid-19 pandemic, proved the acuity of Jesson’s observation. The system-wide impact of those wage subsidies, coupled with the Reserve Bank’s enthusiastic embrace of quantitative easing, prevented the New Zealand economy from tipping over into a fully-fledged crisis.

Bruce Jesson (1944-1999) would not have made a good courtroom lawyer. With his coke-bottle glasses and his tendency to mumble, Jesson’s rapport with the average jury was not likely to have been much better than Mr Magoo’s.

The legal profession’s loss, however, was the world of political commentary and analysis’ gain. Jesson, a staunch anti-monarchist since his student days at the University of Canterbury, was denied admission to the Bar because he refused to swear allegiance to the Queen. That fateful refusal propelled him to launch his own magazine – The Republican – and to turn his razor-sharp mind to making sense of New Zealand’s subaltern political culture.

And Jesson was very good at it. So good, in fact, that the founder of Metro magazine, the late Warwick Roger, gave Jesson his own column. Impressed, Penguin Books commissioned and published Jesson’s stand-out books on Rogernomics, Behind the Mirror Glass and Fragments of Labour. Equally impressed, the University of Auckland awarded him a fellowship. Finally, Jesson was nominated as one of the Alliance’s candidates for the Auckland Regional Services Trust. As chairman of the ARST, Jesson worked alongside some of Auckland’s canniest businessmen to not only preserve the municipal assets the trust was set up to privatise but also to pay off early the debt those privatisations were supposed to clear.

Jesson could do this because he grasped the essentials of both New Zealand capitalism and New Zealand politics better than any of his contemporaries. Perhaps his most memorable quip concerning the defining drivers of this country’s electoral politics was: “The National Party governs for capitalists. The Labour Party for capitalism.”

With Labour having executed a near-perfect transition from Jacinda Ardern to Chris Hipkins, New Zealand’s capitalists are now tasked with deciding what they most want to emerge from the October general election: a party that governs for their class or for their system?

Had Ardern and her Finance Minister Grant Robertson adopted a piecemeal, enterprise-specific approach, attempting to appease all businesspeople large and small, the impact on the broader economy would have been nowhere near as beneficent. Moreover, the consequences of such an approach to the overall health of New Zealand society would likely have proved as disastrous as UK Prime Minister Boris Johnson’s vacillating approach to fighting covid-19.

Ill-conceived and damaging

Chris Hipkins’ installation in the Prime Minister’s office is not, however, a response to Labour’s economic policies. Even a cursory comparison with the performance of most other OECD economies shows these to have been remarkably effective. Rather, it is a response to Labour’s extraordinary mishandling of cultural policy, most particularly those policies relating to te Tiriti o Waitangi.

These policies are not only ill-conceived and potentially damaging in their own right but they also prove the truth of the observation that for every extreme action there is an equal and opposite extreme reaction.

The Ardern government’s refusal to share with the New Zealand people its intention of mapping out the constitutional consequences of signing up to the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) fuelled the fires of political paranoia and conspiracy that were, thanks to covid, already burning high.

Loud denials that the UNDRIP-inspired prescription laid down in the secretly-commissioned He Puapua report represented government policy were met with open scepticism in the face of legislative initiatives that matched closely He Puapua’s recommendations.

The most significant of these was the Three Waters project promoted by Local Government Minister Nanaia Mahuta. To the right-wing parliamentary parties, the Ardern government appeared committed to a radical cultural reform program that not only lacked an electoral mandate but which was also being implemented with indecent haste and without social licence.

The primary role assigned to Chris Hipkins is that of the man who steps up with raised hand in front of New Zealand to affirm that, in spite of recent appearances, the Labour Party is not those kind of men

Chris Trotter

Continued from page 08

Inevitably, the Opposition parties responded. First ACT and then (less decisively) National promised that should these radical “co-governance” initiatives became law, then they would be repealed as a matter of urgency by an incoming National/ACT coalition government.

Radical interpretation

Only the ACT Party, however, was prepared to follow Labour’s co-governance policies through to their logical – and thoroughly undemocratic –constitutional conclusions. Understanding that all of the policies ACT objected to were being driven by a radical (and hotly contested) interpretation of te Tiriti o Waitangi, ACT leader David Seymour pledged to spell out clearly, in legislative form, what might best be described as the traditional understanding of te Tiriti’s meaning. If that interpretation was upheld in a binding referendum, then Labour’s radical co-governance project would come to a grinding halt.

Given that Seymour’s proposed referendum would, almost certainly, produce a clear majority in favour of the traditional interpretation of te Tiriti –ie, that it granted full sovereignty to the Crown – the reaction of many Māori is readily predicted. There would be something very close to a revolt.

There are some lines in Bob Dylan’s song Joey – his tribute to New York gangster Joe Gallo – that sum up neatly the problem such a racially-charged revolt would pose for New Zealand capitalism:

The hostages were tremblin’ when they heard a man exclaim

Let’s blow this place to kingdom come, let Con Edison take the blame

But Joey stepped up, he raised his hand, said, we’re not those kind of men

It’s peace and quiet that we need to go back to work again

It seems clear that the primary role assigned to Chris Hipkins is that of the man who steps up with raised hand in front of New Zealand to affirm that, in spite of recent appearances, the Labour Party is not those kind of men. That there is simply no stomach in Labour for policies more-or-less guaranteed to blow New Zealand to kingdom come.

Māori Development Minister Willie Jackson has already conceded the truth of this claim by deliberately withholding the co-governance recommendations of his constitutional advisory group from Cabinet, on the not unreasonable grounds that no Pakeha politician in his or her right mind could possibly endorse such revolutionary proposals.

Undoubtedly, there are individual capitalists out there who are extremely keen to see National and ACT put an end to co-governance policies once and for all. What such people do not grasp, however, is that nothing short of deadly force will prevent Māori from contesting bitterly what they would undoubtedly condemn as a deeply racist outcome.

No sane corporate leader or small businessperson could possibly contemplate such a scenario with equanimity. To put it in the bluntest terms, civil war is not good for business. Peace and quiet is what New Zealand capitalism needs to go back to work again.

A Labour government, with a new leader determined to pull his party back on track, will be in a far better position to govern for New Zealand capitalism as a whole than a National-ACT coalition government committed to openly confronting the forces of Māori nationalism.

In the months ahead, New Zealanders will discover whether their corporate leaders, both individually and collectively, possess the analytical nous of a Bruce Jesson and the shrewd common sense of a New York gangster. ■ Chris Trotter is a political commentator and columnist of more than 30 years’ experience and the owner of the Bowalley Road blog site ■

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Proposed directors’ duties bill ‘unnecessary’, with unintended consequences

James Cooney, Jesse Wilson & James Gibson

A Parliamentary select committee is considering a proposal to amend the duty of directors to act in the best interests of the company. The Companies (Directors Duties) Amendment Bill would amend s 131 of the Companies Act 1993 to provide that directors may take into account recognised environmental, social and governance (ESG) factors when determining the best interests of the company.

We consider the bill is unnecessary because directors can – and do – already consider ESG matters where relevant and appropriate to assessing the best interests of the company. While well-meaning, the bill may have unintended consequences, including an increased litigation risk for directors, encouraging a check-box mentality in decision-making and increasing compliance costs.

Proposed by MP Dr Duncan Webb, the bill would amend s 131 by inserting the following new subsection: (5) To avoid doubt, a director of a company may, when determining the best interests of the company, take into account recognised environmental, social and governance factors, such as:

■ recognising the principles of the Treaty of Waitangi (Te Tiriti o Waitangi);

■ reducing adverse environmental impacts;

■ upholding high standards of ethical behaviour;

■ following fair and equitable employment practices; and

■ recognising the interests of the wider community.

Our submission to the Economic Development, Science and Innovation Committee is available here

Key points: Inadequate problem identification

Is there an identified problem that the proposed change would solve? The stated purpose of the bill is to make clear that a director “can take actions which take into account wider matters other than the financial bottom-line”.

In our opinion, there is no current issue with directors doing so, including by having regard to ESG considerations when acting in what they believe to be the best interests of the company.

That is because directors are given the latitude, through a subjective test and acknowledgement of business judgment, to

consider what they believe to be the company’s best interests. This includes taking a long-run view. In our experience, many boards of directors already have regard to these considerations.

Risk of unintended consequences

Although the bill appears well-intended, it risks unintended consequences. These include:

■ increased litigation risk for corporate directors by creating a potential foothold for legal challenges to directors’ business judgment;

■ the possible emergence of a “check-box” mentality in board decision-making; and

■ increased compliance costs.

In particular, we see a risk that a court might interpret the express permission for directors to consider the “recognised” factors as suggesting an implicit hierarchy of considerations relevant to the best interests of the company or as suggesting in some circumstances a director must take into account such factors as relevant considerations. This may give rise to the risk of liability for boards of directors that cannot evidence that they sufficiently considered such factors in the context of otherwise good-faith decision-making.

Suggested amendments

If the bill is to proceed, we consider it would be desirable to make certain drafting changes, including:

■ aligning the wording with the existing subsection 131(1) of the Companies Act to avoid any implication that there may be only one correct view as to what the best interests of the company are;

■ removing the word “recognised”, which may inadvertently undermine the good faith, subjective business judgment inherent in s 131 and create uncertainty and conceptual confusion; and

■ clarifying that the listed considerations are not exhaustive and that there is no particular hierarchy among those listed considerations. ■

James Cooney, Jesse Wilson and James Gibson are partners at Bell Gully. Amon Nunns, Alix Boberg and Tim Shiels also contributed to this work ■

The bill may have unintended consequences, including an increased litigation risk for directors, encouraging a check-box mentality in decision-making and increasing compliance costs

We consider the bill unnecessary because directors can, and do, already consider ESG matters where relevant

WILL INQUIRIES

Please refer to deeds clerk. Please check your records and advise ADLS if you hold a will or testamentary disposition for any of the following people. If you do not reply within three weeks it will be assumed you do not hold or have never held such a document

LawNews: The no-hassle way to source missing wills for $80.50 (GST Included)

reception@adls.org.nz ADLS, PO Box 58, Shortland Street, DX CP24001, Auckland 1140 Fax: (09) 309 3726 (09) 303 5270

ARAMA

Wiremu Grant

• Late of 9 Wobum Street, Mangere, Auckland

• Divorced

• Truck driver

• Aged 52 / Died 06’09’22

DUFF

Jonathan James

• Late of 68D Tihi Street, Stonefields, Auckland

• Single

• Engineer

• Aged 27 / Died 02’11’22

HARTNETT

Simon Alexander (aka Horace)

• Late of 2/8 Kirklow Place, Goodwood Heights, Auckland

• Married

• Unemployed

• Aged 54 / Died 21’11’22

MELVILLE

Gordon Raymond

• Late of 41 La Trobe Street, Pakuranga Heights, Auckland

• Married

• Aged 76 / Died on or about 16’11’22

OBRIEN-FINAU

Jennifer Talitiga

• Late of 19 Steven Street,

Time to take down your shingle?

Do you want to retire or move away from the practice of law?

We are a small Auckland CBD practice.  We do litigation, commercial, property and trust and estate work.  We want to expand our client base by acquiring one or more client bases.  We are open to different arrangements to achieve this.

If this sounds like you, please email us on takedownyourshingle@gmail.com.

All replies will be treated with absolute confidentiality.

Mangere East, Manukau, Auckland

• Single

• Fork hoist operator

• Aged 53 / Died 23’10’21

RAINGER

Denise Carol

• Late of 80 Saddleton Road, Clarks Beach, Waiau Pa, RD4, Pukekohe

• Telesales consultant

• Aged 45 / Died 20’11’22

ROPATI

Puaauli

• Late of Hornby, Christchurch

• Never in a legal relationship

• Formerly factory worker

• Aged 52 / Died 06’12’22

THAKKAR

Smita

• Late of 25 Littlejohn Street, Hillsborough, Auckland

• Married

• Company director

• Aged 55 / Died 11’11’22

ZHAI

Xiaohong

• Late of 56 Matarangi Road, East Tamaki, Auckland

• Married

• Housewife

• Aged 62 / Died on or about 11’12’21

Offices Available

Following some barristers retiring, we have three offices of varying sizes available for rent.

The Chambers share a refurbished floor (with separate areas) with Hussey & Co., a boutique forensic and general accounting firm. There are shared meeting rooms (a formal boardroom with video conferencing facilities and a less formal meeting room), and communal entrance and client waiting area.

Telephones, internet connection, printing and secretarial services also available and some furniture available.

Cost depends on office size and range from $150 – $300 per week plus gst. No long-term commitment required.

Photographs of the Chambers can be viewed at www.hco.co.nz/gallery.

Contact: Shane Hussey for further details, Shane@hco.co.nz 09 300 5481

FAMILY LAWYER

We’re looking for an experienced family lawyer to join our friendly team, based in Takapuna.

This is a varied, interesting role with a competitive salary, flexible working arrangements and plenty of opportunity for progression.

The successful applicant will have at least five years’ family law PQE. Experience in relationship property matters, private client childcare, domestic violence and PPPR court work is essential.

To apply for the role, please send your CV and cover letter to our Practice Manager Desiree Mason on desiree@armstrongmurray.co.nz

Elizabeth Robertson, Sole Practitioner in Glendowie, Auckland is pleased to announce the merger of her practice with the practice of Quinn Law, Kohimarama, Auckland. As from 1 February 2023 Elizabeth will be joining Quinn Law as a part-time Consultant. The contact details for Elizabeth will be PH: (09) 521-0639 and Email elizabeth@quinnlaw.co.nz. Quinn Law welcomes Elizabeth and her clients.

Quinn Law is also pleased to announce that Alexandra Sintes (a current Registered Legal Executive Fellow and long-term staff member) is now a Licensed Conveyancing Practitioner so a huge congratulations to Alex.

ALL LEVELS IMPROVEMENT WORKSHOP

Personal effectiveness workshop

Online 4 CPD hrs

Thursday 9 February 9am – 1.15pm

Price from $400 +GST

Facilitator Tony Gardner, managing director, Archetype Leadership + Teams

Landonline update

ALL LEVELS PROPERTY WEBINAR

Do you have a clear vision for 2023? Could you improve your work methods? Are you trying to get to grips with working effectively in a hybrid model?

Webinar 1 CPD hr

Monday 13 February 12pm – 1pm

Price from $80 +GST

Presenter Andrea Watson, consulting solicitor for the Modernising Landonline program, LINZ

This webinar offers tips on using the new Landonline functionality, along with updates on future tweaks to the system.

Corporate trustee governance and decision-making

Livestream | In person

ALL LEVELS TRUSTS SEMINAR

1.5 CPD hours

Wednesday 15 February 4pm – 5.30pm

Price from $110 +GST

Presenters Vicki Ammundsen, director, Vicki Ammundsen Trust Law and Theresa Donnelly, legal services manager, Perpetual

This seminar will address practical issues and risks when acting as a corporate trustee. This includes the wearing of two hats if acting as lawyer for the trust, corporate trustee structure and constitution, multiple trust appointments, PI implications and trustee duties.

Writing right – for family lawyers

Livestream | In Person

2 CPD hrs

Thursday 16 February 2023

4pm - 6.15pm

Price from $140 + GST

Presenters Judge Kevin Muir and Brian Carter, barrister

This seminar, with bench and bar perspectives, offers direction and insights into effective, concise drafting. In other words, writing right.

Build your brand (junior)

In person 2 CPD hours

Tuesday 21 February

9am - 11.15am

Price from $300 + GST

Presenter Anne Casey, founder and director, Marketing Minds

Overseas Investments in New Zealand small businesses

This foundation workshop will provide an overview of digital marketing, including personal branding and why it is important. It will also take a deep dive into LinkedIn, covering tips and tricks, interacting in a professional manner and how to represent your firm.

Webinar 1 CPD hour

Thursday 23 February 12pm – 1pm

Price $80 +GST

Presenters Members of the monitoring and intelligence team, Overseas Investment Office

This webinar will cover the overseas investment regime as it applies to investments in businesses or business assets under $100 million. It will explain the different types of businesses covered by the National Security and Public Order notification regime and help you to recognise when a mandatory notification could be required.

Insights into ESOPs

Webinar 1.5 CPD hrs

Monday 27 February 12pm – 1.30pm

Price from $110 +GST

Presenters Alex Franks, partner, Chapman Tripp and Bevan Miles, partner, Chapman Tripp (Tax) Chair Andrew Lewis, principal, Andrew Lewis Law

Build your brand (firm)

In person 1.5 CPD hours

Tuesday 28 February 9am – 10.30am

Presenter Anne Casey, founder and director, Marketing Minds

To advise on ESOPs, you need to understand the different types of ESOP, tax and securities law considerations and the practical steps needed to establish and administer a scheme. This webinar will provide key information to enable you to effectively navigate this area.

Working with lawyer for child

Livestream | In Person

2 CPD hrs

Tuesday 28 February 2023

4pm – 6.15pm

Price from $140 + GST

Presenters David Amodeo; Val Muller; Sonya Singh and Craig Walker

Privacy for legal professionals

Webinar 1.5 CPD hours

Thursday 2 March 12pm – 1.30pm

Presenters Amy KingstonTurner; Edwin Lim; Luke Han, and Tegan Hall

Chair Lloyd Gallagher, managing partner, Gallagher & Co

This workshop includes an overview of digital marketing and its importance. It outlines the channels most suited to legal firms, including email marketing, websites, video formatting, Tik Tok and YouTube. Learn how to get the most from your LinkedIn firm page and how to get your lawyers engaged with digital marketing.

Providing perspectives from those in the role, the judiciary and the ministry, this seminar provides key insights into what the role is (and is not); the statutory framework; the balancing act required in considering the child’s views and his or her welfare and best interests; the role in different contexts; managing challenges and the use of reports.

Chair Judge Alexander Laurenson

Join

IMMIGRATION AND PROTECTION TRIBUNAL FULL–TIME MEMBER (Auckland)

Applications are invited from persons wishing to be considered for appointment as a full-time member of the Immigration and Protection Tribunal (IPT) based in Auckland.

The IPT is established under the Immigration Act 2009. The purpose of that Act is to improve New Zealand’s immigration system, and part of this improvement is streamlining the immigration appeal process by creating a single independent tribunal to consider all grounds for appeal together, where possible.

The Tribunal consists of:

• Chairperson, being a District Court Judge

• A Deputy Chairperson

• Members, being lawyers who have held a practising certificate for at least 5 years or have other relevant or appropriate experience (whether in New Zealand or overseas) Further details and an application pack are available from the Ministry of Justice website here

The closing date for applications is 10 February 2023

Corporate Trustee Governance and Decision Making: Dos and Don’ts

Wednesday 15 February | 4pm - 5.30pm | In

This seminar will address practical issues and risks to be aware of when acting as a corporate trustee, including wearing “two hats” if acting as lawyer for the trust, corporate trustee structure and constitution, multiple trust appointments, PI implications and trustee duties.

Senior commercial/property lawyers required East Auckland Fast-track to partnership

We are a friendly medium-sized firm in Flat Bush, Auckland, established for many years. Owing to retirement we now seek potential partners.

This is a genuine opportunity for partnership in the short-to medium-term for the right candidate (with no money down).

We seek lawyers with 5 years’ plus PQE and proven experience in property and commercial matters. If this sounds like you, please get in touch to explore options.

Richard Brown – Director 09 271 5880 richard@murdochprice.co.nz

Murdoch Price

Lawyers

Person & Live Stream