LawNews - Issue 13

NEWS May 6, 2022 Issue 13

Inside ■ OPINION

Why lawyers should reject co-governance P03-05

■ CONTRACT LAW

Be careful with hyperlinks P06

Should employment advocates adls.org.nz

BE LICENSED OR BANNED?

Contents 03-05 COERCION RIGHTS DISCRIMINATION

Co-governance: why reason and the rule of law must prevail

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

07 HIJACK TRUSTS INTENTION

Trust law: are emerging shams ‘a thing’?

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08-11 REGULATION BAN DISCLOSURE

The uneasy relationship between employment lawyers and advocates

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12-13 FEATURED CPD

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CPD IN BRIEF

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Cover: GaryAlvis / Getty Images

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May 6, 2022 Issue 13

CONSTITUTIONAL LAW/OPINION

Lawyers must reject co-governance and coercion

Photo: Cam McLaren / Stringer / Getty Images

If co-governance is legitimate, it must be capable of justification through free inquiry, reason and persuasion. It must be possible to use reason to demonstrate that legal discrimination on racial grounds – using the law to place power in the hands of a group based on the race of that group – is okay Gary Judd QC New Zealand is faced with a determined push for a momentous political change called co-governance, but really a devolution of power to an unelected tribal elite who have been described in Cabinet papers as ‘iwi/Māori’.

Giving powers of veto and more, co-governance will enable iwi/Māori to impose their will on the ordinary people of New Zealand.

Chris Trotter’s Co-governance: New Zealand’s own Catch-22 in LawNews (Issue 10) argues that we should surrender to coercion and avoid violent revolution. I say co-governance is wrong and surrender to coercion is wrong, but we should thank Chris Trotter and LawNews for unveiling the agenda.

The pursuit of justice according to law is a specialised subset of free inquiry, reason and persuasion

Reason and persuasion are the only practicable instruments. To make way for these, free enquiry must be indulged; and how can we wish others to indulge it while we refuse it ourselves.”

If independent individuals use free inquiry and reason to persuade others, the right answer is more likely to be forthcoming. The consequences of suppressing free inquiry and demanding compliance are graphically demonstrated by historical experience such as when Galileo was subjected to inquisition and condemned to house arrest until his death in 1642 for the heresy of suggesting that the earth revolves around the sun.

The dialogue induced by free inquiry, reason and persuasion helps to sort out the right from the wrong, the correct from the incorrect.

Free inquiry, reason and persuasion Thomas Jefferson was educated as a lawyer and the law was the activity of his early years. He is best known as the principal author of the Declaration of Independence and one of America’s founding fathers.

Amongst Jefferson’s Notes on the State of Virginia, written around 1782, are principles of a civilised society. He said: “Reason and free enquiry are the only effectual agents against error. …

‘Un-ordinary’ prepared to sacrifice liberty and democracy Trotter’s profoundly disturbing, indeed horrifying message is that the political and bureaucratic establishments’ submission to

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demands for co-governance is motivated by a desire to avoid “a full-blown revolution”.

He says that asking the people, a referendum, would almost certainly halt the push for change and create “revolutionary conditions”.

Trotter’s analysis, if correct, uncovers a sinister and unscrupulous use of the power of express or subtle threat working on the gullible, on those who think what’s happening is advantageous to them and on those who want to feel virtuous.

Trotter appears to be in favour. He concludes: “If we’re wise, we’ll skip the fratricidal strife bit and go straight to power-sharing.

There are worse things in this world than co-governance. Just ask the Ukrainians”.

As a pertinent aside, I don’t know why asking the Ukrainians would produce endorsement of power-sharing. They are fighting to preserve their freedom and demonstrating how precious is liberty. As the commentary by 15 ambassadors and high commissioners to New Zealand published in the April 23 Weekend Herald concluded, “the people of Ukraine are demonstrating that liberty, democracy, and human dignity are forces far more powerful than fear and oppression”.

Trotter would have us believe that fear and oppression should prevail. He thinks we should capitulate.

Despite those depressing ideas, I believe ordinary people of New Zealand no less than those of Ukraine hold dear the values of liberty and democracy. It is the ‘un-ordinary’ New Zealanders who congregate in Wellington, the universities and in various institutions including some within the legal profession, who would surrender the rights of ordinary New Zealanders to coercion from those prepared to use force to gain their ends.

Reason and rule of law must prevail But my main point is that if co-governance is legitimate, it must be capable of justification through free inquiry, reason and persuasion. It must be possible to use reason to demonstrate that legal discrimination on racial grounds – using the law to place power in the hands of a group based on the race of that group – is okay.

If the proponents of co-governance knew they could succeed through critical thinking, reasoned argument and persuasion, it is to be supposed they would follow that path. Coercion would be unnecessary.

This leads to what should be top of mind for all lawyers. As lawyers, we understand the rule of law. Compliance with the rule of law during his or her practice is a fundamental obligation of every lawyer who provides regulated services.

We understand that disputes are to be resolved not by force or by threats of force – that is, by coercion – but by seeking 04

Equal treatment under the law is a human right. Cogovernance introduces legal distinctions between people of Māori and non-Māori descent.

It uses the law to give preferences to Māori. That is its purpose

justice according to law. The pursuit of justice according to law is a specialised subset of free inquiry, reason and persuasion.

The rule of law is of a higher order than law. Laws, being man-made edicts, may be perverse. They may destroy that which they should protect. They may infringe the rule of law. The rule of law is not the rule of laws. Tyrants often exercise their tyranny through laws.

Human rights, the rule of law and democracy are interlinked and mutually reinforcing. They are universal and indivisible core values and principles which cultural evolution has produced.

A few steps forward, then a step backwards, but still steady progress toward a state of civil society where formal rules and institutions replace individual leaders, and every individual’s rights are respected.

The rule of law does not prevail everywhere. In kleptocracies where it does not prevail, such as Russia, China and North Korea, fear and oppression are necessary to keep the ordinary people in line.

Chris Trotter commences his article: “The laws of the land should come at the end of the political process, not at the beginning.” That cannot be true of a political process characterised by deception and coercion, and the political process cannot legitimise laws which infringe the rule of law. If they are enacted, they will still be illegitimate when judged by the standards of a civilised society.

The rule of law is the foundation for a legitimate political process. A political process which contravenes the rule of law is an abomination. Constitutional reforms have attempted to rid society of it.

Constitutional heritage Philip Joseph On Constitutional and Administrative Law (5th edition, Ch. 2.3) records that New Zealand inherited as law in 1840 Acts of the Parliaments of England, Great Britain and the United Kingdom which included statutes of constitutional and historical significance.

Section 15(2) of the Constitution Act 1986 revoked the residual power of the United Kingdom Parliament to legislate for New Zealand, but this revocation did not solve the problem of which pre-1840 imperial statutes still extended as law to New Zealand. This was resolved by the Imperial Laws Application Act 1988, an Act to specify the extent to which Imperial enactments, Imperial subordinate legislation and the common law are part of the laws of New Zealand.

Parliament declared that any Act of the Parliament of England, or of the Parliament of Great Britain, or of the Parliament of the United Kingdom listed in Schedule 1, is part of the laws of New Zealand. From the commencement of the 1988 Act all other

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May 6, 2022 Issue 13

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imperial enactments are not part of the laws of New Zealand.

One of the imperial enactments in Schedule 1, under the heading Constitutional enactments, is part of Statutes of Westminster; The First 1275. The part confirmed to be part of New Zealand law provides: “the King willeth and commandeth … that common right be done to all, as well poor as rich, without respect of persons.”

Magna Carta, much better known, was forced upon King John in 1215. It was reissued several times. C 29 of the 1297 reissue is a Constitutional enactment in Schedule 1. It states: “No free man shall be taken or imprisoned, or be disseised of his freehold, or liberties, or free customs, or be outlawed, or exiled, or any other wise destroyed; nor will we not pass upon him, nor condemn him, [deal with him] but by lawful judgment of his peers, or by the law of the land. We will sell to no man, we will not deny or defer to any man either justice or right.”

So, we can see that about 800 years ago, the Crown commanded equality before the law, and subservience to the rule of law. Those commandments were painfully extracted, and pain continued over the centuries as the ordinary people sought to maintain them against the tyrannical tendencies of monarchs and others who have sought chiefly status and personal gain at the expense of the governed.

These are among the constitutional precepts which became part of New Zealand’s law in 1840 when by Article 3 of the treaty all the ordinary people of New Zealand were given the same rights and duties of citizenship as the people of England. And, in 1988, when cleaning out the imperial legislation which was not to be part of New Zealand’s law, these provisions were expressly retained as constitutional enactments.

Co-governance defies our CERD obligations The fight for equality before the law is now also manifest on the international stage.

Pertinent to co-governance is the International Convention on the Elimination of All Forms of Racial Discrimination (CERD). New Zealand ratified the Convention in 1972. CERD binds New Zealand to promote the exercise “on an equal footing” of human rights and fundamental freedoms in the political, economic, social, cultural and other fields of public life. New Zealand must prohibit and condemn distinction, exclusion, restriction or preference based on race or ethnicity, other than temporary measures to promote equal treatment.

CERD applies to discrimination against any group where the discrimination is based on race or ethnicity or one of the other similar descriptions in the convention. It is worth remembering that South Africa’s apartheid regime was discrimination against the majority.

If the proponents of cogovernance knew they could succeed through critical thinking, reasoned argument and persuasion, it is to be supposed they would follow that path.

Coercion would be unnecessary

Confirmation that there may be discrimination against a majority group has just come from an unexpected quarter.

Section 19(1) of the Bill of Rights Act 1990 affirms the right to freedom from discrimination on the grounds set out in the Human Rights Act 1993. On 21 April, the Attorney-General presented his report under s 7 of the Bill of Rights on the Rotorua District Council (Representation Arrangements) Bill.

He reported that the Bill drew a distinction on one of the prohibited grounds of discrimination. In reaching that conclusion he reported that: “A distinction will arise if the legislation treats two comparable groups of people differently on one or more of the prohibited grounds of discrimination”.

He went on to state that the Bill “therefore could be seen to draw distinctions on the basis of race or ethnic origins, between people of Māori and non-Māori descent”. The Attorney-General’s conclusion was that the Bill contravened s 19 of the BOR and, on the information available to him, cannot be justified under s 5 (justified limits on rights and freedoms in a free and democratic society).

Equal treatment under the law is a human right. Cogovernance introduces legal distinctions between people of Māori and non-Māori descent. It uses the law to give preferences to Māori. That is its purpose. It nullifies or impairs the recognition, enjoyment and exercise, on an equal footing, of human rights and fundamental freedoms in the political, economic, social and other fields of public life, contrary to CERD. Advocating co-governance promotes that which CERD binds New Zealand to prohibit and condemn.

Lawyers must reject co-governance If Trotter is right, there are those within our society who are causing New Zealand to abandon the rule of law. Not just by the adoption of inequality under the law as an actively pursued political agenda, but also by the proponents’ use of coercion, not law, to achieve their ends. He says resistance “would lead inexorably to a civil war – the outcome of which would be far from certain” and suggests that those who resist are extremists.

He has got it around the wrong way. It is not extremist to hold fast to principles and values. That’s what we should do. That’s what the Ukrainians are fighting for. That’s what New Zealanders have fought for, as we remember each Anzac Day. On the other hand, it is extremist to advocate throwing principles and values away and, even worse, to use force and with inflammatory rhetoric to condone its use. Criminal acts and threats of violence are extremist, and it is extremist to advocate capitulation to criminal actions and threats of violence.

In the name of our fundamental obligations to uphold the rule of law and to facilitate the administration of justice, lawyers must reject these evil and unhealthy developments. ■ Gary Judd QC is an Auckland barrister ■ 05

CONTRACT LAW

Online contracts: US court gives a lesson in web design Richard Massey

Richard Massey

The colour of a hyperlink may seem like a minor point of detail, but it assumed surprising significance in a recent decision of the US Court of Appeals which offers helpful insights into the principles governing the enforceability of online contracts.

The key takeaway from Berman v. Freedom Financial Network, LLC; Freedom Debt Relief, LLC; Fluent, Inc.; Lead Science, LLC, WL 1010531 (9th Cir. Apr. 5, 2022) for businesses looking to ensure their agreements are binding on online customers, is that hyperlinks to terms and conditions should ideally appear in blue underlined font and should be accompanied by a clear explanation of which specific action will signify acceptance.

While New Zealand continues to await judicial clarification of the rules regarding online contracts and the principles governing their enforceability, overseas case law provides a useful indicator of the factors likely to be relevant.

Case summary Berman v Freedom Financial Network & Others concerned two customers who visited various retail websites operated by a marketing company.

In the process of registering on those websites, the customers provided personal information which was then used by the company for the purposes of an extensive telemarketing campaign.

The customers filed proceedings alleging that the relevant marketing messages they received were sent without their consent, in breach of US consumer protection legislation.

The company claimed the case could not proceed because of an arbitration clause in the terms and conditions which they argued had been accepted during the sign-up process. The relevant terms had been presented via a hyperlink in grey font above a green ‘continue’ I understand and agree to the Terms and Conditions button, which the customers had both which includes mandatory arbitration and Privacy Policy. clicked during the sign-up process.

A screenshot in the judgment depicted the registration form as per the image to the left.

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Links to terms should be transparently and conspicuously presented, in ‘traditional’ hyperlink formatting, which in the court’s view meant blue, underlined and capitalised

The key issue for the court was whether the terms should be binding on the customers.

Court’s analysis Consistent with past US case law on online terms, the court approached the issue in two parts, by considering: (a) whether the website provided reasonably conspicuous notice of the terms; and (b) whether it required the consumer to agree to the terms unambiguously.

On both grounds the court found the terms were not enforceable. In reaching that view, the court (the Ninth Circuit, with jurisdiction over Silicon Valley and well versed in such matters) drew on a line of its own judgments where similar online registration processes had been disputed.

On the first issue, the court found the website had failed to provide reasonable notice of the terms. That was based on a detailed analysis of the formatting and presentation of the relevant links. The key issues were: ■ the relevant text was in ‘tiny grey font’ and the hyperlinks appeared in the same grey font as the rest of the sentence; ■ the hyperlinks were not in blue, which the court described as “the colour typically used to signify the presence of a hyperlink”. Separately, the judgment stressed the importance of “a contrasting font colour (typically blue)” to signal a hyperlink; ■ the text also lacked the use of capital letters – another “customary design element denoting the existence of a hyperlink”; and ■ the underlining of the links, while a feature of a hyperlinks, was insufficient without more. As the court noted, businesses “must do more than simply underscore the hyperlinked text in order to ensure that it is sufficiently “set apart” from the surrounding text”. That is because consumers cannot be required to ‘ferret out hyperlink’ by hovering their mouse over otherwise plainlooking text.

On the second issue, the court found it was not clear what action

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May 6, 2022 Issue 13

TRUST LAW

How a trust might become an ‘emerging sham’ Anthony Grant

The doctrine of emerging sham is controversial and I consider that for all practical purposes it doesn’t exist

discretionary family trusts and a discretionary beneficiary with no fixed entitlement to a distribution will not I was asked by a colleague the other be willing to spend money on High day about a trust that most nonCourt litigation of that nature, meaning lawyers would call a sham. that the hijacking trustee will carry on A trust that started off as genuine flouting the law and plundering the with the trustees all being involved in trust’s assets. decision-making had been hijacked The courts, as guardians of trusts, by one of them. He bought properties Anthony Grant ought never to allow this state of affairs without informing his co-trustees, took to exist. In the Raftland case [2008] trust money, failed to produce financial HCA 21, Kirby J of the High Court of Australia delivered statements for the trust, failed to keep records of trust what is almost certainly the most comprehensive assets and liabilities and was generally completely judgment in the Commonwealth on sham trusts. He unaccountable. sensibly called for courts to adopt “a broader and more Under our law at present, the trust would not have robust approach to the identification of sham”. been a sham since the trustees would all have said at He referred with approval to a decision of the the outset that they genuinely intended to create a New Zealand Court of Appeal in Marac Finance v trust. The Court of Appeal said in OA v Wilson [2007] Virtue [1981] 1 NZLR 586 in which Richardson J said NZCA 122 that “unless the appearance of a sham can there were two situations where “a document may be be traced back to the creation of the trust, the trust brushed aside if and to the extent that it is a sham”. remains valid”.

One of the circumstances is “where the document was The trust my colleague described involved similar bona fide in inception but the parties have departed facts to those of Vervoort v Forrest [2016] NZCA 375 from their initial agreement and yet have allowed its where the Court of Appeal rejected a claim that the shadow to mask their new arrangement”. trust had developed into an ‘emerging sham’.

In recent times the leading case on shams in New If the doctrine of ‘sham’ were to apply to such a Zealand is the Supreme Court’s decision in Ben Nevis trust, it would have to be via the ‘doctrine’ – if it exists v CIR [2009] 2 NZLR 289. In that case, Blanchard and – of ‘emerging sham’.

Wilson JJ said, “a document which originally records The doctrine of emerging sham is controversial the true common intention of the parties may become and I consider that for all practical purposes it doesn’t a sham if the parties later agree to change their exist. If a trust starts off with its trustees all intending arrangement but leave the original document standing that the trust would be genuine, and if the trust and continue to represent it as an accurate reflection subsequently went off the rails and was hijacked by a of their arrangement”. trustee, the courts would say the appropriate remedy The Court of Appeal also acknowledged in was for a beneficiary to sue the trustee for breaches Vervoort v Forrest that a trust that started off as of various obligations and not to plead that the trust genuine “becomes a sham because there has been a was a sham. deliberate change in the trust arrangement so that it Most conventional trusts in New Zealand are

no longer has any of the characteristics of a trust, and the use of the trust name has become a deliberate pretence of a trust arrangement”.

There is therefore high authority in New Zealand for the fact that a trust that was genuine at the outset can cease to be genuine and become a sham as time goes on.

Justice Kirby said in Raftland that “sham can develop over time if there is a departure from the original agreement and the parties knowingly do nothing to alter the provisions of their document as a consequence”.

A finding that a trust that once was genuine has ceased to be so ought not to be concerning.

What is problematic is the requirement that “the parties to the trust” must have departed from the initial agreement. By ‘the parties’ I assume the court is speaking of all the trustees and office holders.

I suspect that if professional trustees have been side-lined by a hijacking trustee, they would say they still intend the trust to be genuine but have been wrongly excluded from trust management and decision-making by the hijacking trustee.

In these circumstances I consider that a concerned beneficiary should contact the other trustees and try to obtain the information and assistance the hijacking trustee ought to be providing but which is being withheld.

If the other trustees are unwilling to do this, or are unwilling to do so satisfactorily, then it would not be unreasonable to say the trustees are no longer willing to comply with the terms of the original deed of trust and are operating a sham.

In this way, a trust that started off as genuine can cease to be genuine and the trustees be held to be party to an ‘emerging sham’. ■ Anthony Grant is an Auckland barrister specialising in trusts and estates ■ 07

EMPLOYMENT LAW

Employment advocates:

dangerously incompetent or

access-to-justice warriors?

You can’t have someone who’s effectively on minimum wage paying a barrister to run a personal grievance

Should lay employment advocates be allowed to represent clients? It’s a question ADLS’ Employment Law committee has asked workplace relations and safety Minister Michael Wood to bump up his agenda.

Stories of incompetence, guerrilla tactics and overcharging by advocates are not uncommon, with the Employment Relations Authority (ERA) issuing practice notes as a result, and even the Employment Court’s Chief Judge Christina Inglis weighing in.

The issue has a long history, dating back to the 1890s. From then, until 1991 when the Employment Contracts Act (ECA) was enacted, only employer or union advocates could appear in the then Arbitration Court.

With the ECA, the unions’ monopoly on legal representation ended and the then Employment Tribunal and Employment Court first accepted lay people acting as advocates. An industry arose as a result.

Several iterations of law reform led to the current system where the ERA and the Employment Court offer a form of dispute resolution designed to relieve congestion in the civil court system.

The new system opened up a new industry in representing employees, often on a no-win no-fee basis which can be lucrative and leading to what some say is a ballooning industry of 08

Photo: wakila / Getty Images

Diana Clement

unregulated representatives.

The shortcomings of a cohort of those advocates form the foundation for arguments for action, ranging from regulation at one end to disbanding the entire industry at the other.

The problem No-one knows how many employment advocates there are. They range from one-man or woman bands to human resources consultancies employing dozens of people. Some advocates have law degrees. But many don’t.

Unlike lawyers, advocates are not subject to the standards required of

a lawyer under their Conduct and Client Care Rules. The problem, says employment lawyer Garry Pollak, is inexperienced and disreputable advocates who use what he calls a loophole as a business opportunity to serve their own interests. “I’m happy to say that. I’ve been saying that for years.”

Lawyers who oppose the very existence of advocates could be accused of defending their patch.

However, even some employment advocates also note problems with their industry.

Pollak began his career as an advocate, representing employers in

the Arbitration Court. “I didn’t have a law degree in 1979 when I started,” he says. “Only advocates from a union or employers’ organisation were allowed to attend [Arbitration Court hearings].” In that era, unions would have culled the poor cases that make their way into the ERA today.

Pollak now laments the lack of barriers to entry for the current breed of advocates. “Maybe they’ve been a payroll officer or a personnel officer.

Many are individuals who have taken

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May 6, 2022 Issue 13

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their own personal grievance [case], and say ‘well, I had to pay somebody to do this. It’s easy because I got a settlement. I’m going to do this for everybody else now and make a business out of it’,” Pollak says.

The ADLS Employment Law committee, says convenor Catherine Stewart, is especially concerned that the public may be misled or simply confused when they engage an advocate, believing they are in fact engaging an employment lawyer.

“The public needs to have full information about the type of representative that they are engaging so that they can make their own informed choices,” Stewart says.

“Members of the committee have experienced many examples where a client has instructed them after having been initially represented by an advocate and the client genuinely thought that their former representative was a lawyer.”

In an undergraduate thesis NonLawyer Employment Advocates and the Trade-Off Between Accessibility and Capability, solicitor Sarah Dippie summarised these complaints under three broad headlines: fees, professional obligations and competence.

Overcharging Overcharging has been considered professional misconduct for lawyers since the 1940s. There are no such rules for advocates.

Employment issues don’t usually result in a clear ‘winner’ or ‘loser’, Dippie notes in her thesis. As a result, an advocate might frame a nominal sum as a ‘win’, triggering a fee, even if their client is entirely unsatisfied, she wrote.

“Both contingency and percentage arrangements result in the advocate having a direct interest in the outcome of cases. This removes their professional independence and could

Lawyers who oppose the very existence of advocates could be accused of defending their patch. However, even some employment advocates also note problems with their industry Catherine Stewart

incite overly zealous behaviour.”

Both lawyers and advocates accuse the other side of overcharging. Employment advocate Nathan Santesso says while he earns ‘decent money’ after 10 years in the business, it’s not on the same scale as a lawyer who might be charging $400+ per hour.

Danny Gelb, who runs Employment Law Advocacy, argues that many clients couldn’t afford lawyers’ fees.

“You can’t have someone who’s effectively on minimum wage paying a barrister …. to run a personal grievance.

They just don’t have the resources. And that’s where advocates do have a place in the employment law arena.

“Should advocates be allowed to represent [others] in the authority and in the Employment Court? It would be a dangerous scenario to stop them from doing so. It’ll limit the justice that’s available to the common person.”

He adds: “One thing I’d say in favour of many advocates is they have a focus on getting a matter resolved, as opposed to taking on a lengthy battle. Because there’s a major conflict of interest when representing people [in] any law matter. If [lawyers] resolve the problem too quickly for the client, they limit their fees whereas some advocates operate either on a fixed-fee basis or a contingency, more commonly known as a no-win no-fee basis.

“So it’s actually in their interest to get the matter resolved in a timely manner and move on to the next one. When you get to those lengthy, elongated battles, there’s always two winners, two losers. The two winners are

normally the representatives. The two losers are the parties.”

Santesso says many clients have no-one else to turn to and the Labour Inspectorate can’t take these cases. He does pro bono cases where the client can’t pay and he volunteers at the Citizens Advice Bureau.

Even with the paid clients, when Santesso doesn’t win, he doesn’t get paid. He notes that there are few other options for many of his clients. “The real victims are the employees who are forced to try to hire someone to deal with the lawyer.”

While advocates get criticism, Santesso says lawyers clog up the system. “They bring on all kinds of technicality, injunctions and things like that. It’s really not supposed to be like that. It’s supposed to be a lay person’s jurisdiction. That’s how it is in Australia.”

Santesso argues that the litigation specialists he comes up against have a vested interest not to settle too soon, instead of settling cases confidentiality and cheaply.

“They squander that, because they feel uncomfortable with that. And they head as fast as they can get to the employment court, that’s where they’re the most comfortable. My goal is to solve the problem. And a bit of a failure for me is if it ends up in the ERA.” Pollak, however, says that lawyers are often cheaper than advocates. “I’m actually quite good friends with two [advocates], and it’s a bloody rort. If [an advocate is] charging five grand

Nathan Santesso

Danny Gelb

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for mediation and they’re doing three mediations a week but doing buggerall work, they can make 15, 20 grand a week.”

Pollak acknowledges there are some “bloody awful lawyers as well”, who fall short of standards. “At least clients can challenge the work they do, and the fee.

And to be a member of the Law Society, you have to have indemnity insurance.”

Advocate Ashleigh Fechney agrees that some advocates charge too much. “The real problem with a lot of advocates is they work on a no-win no-fee basis. And that goes up to about 40% [of winnings]. The less-than-ideal advocates will be willing to do the least amount of work for that money,” she says.

Professional obligations Dippie notes that while lawyers are bound by their Conduct and Client Care Rules and unions by a variety of rules as well as the democratic structure of their organisations,

been slapped with penalties.

Concerns about employment advocates led to the issuing in 2019 of a practice note. Conduct of Representatives in the Employment Relations Authority.

Among other points, it notes that representatives should be polite and constructive in their dealings with the ERA and comply strictly with timetables.

The practice note went as far as to say that representatives needed to have finished sorting their papers and talking to clients before the hearing’s appointed start time.

The issue of vexatious employment advocates has been noted all the way to the top.

In 2019, Chief Judge Inglis voiced her concerns. In her costs judgment in Ward v Concrete Structures she made comments about an advocate who had been involved in the case.

“There is a limit to the extent to which the court can appropriately address professional standards issues which arise in respect of the conduct of some advocates and which impacts on often vulnerable litigants, the opposing

There’s an access-to-justice argument in there. I think they are such a part of the landscape now and fill a potentially valuable role in the market, that they shouldn’t be banned

employment advocates are answerable only to general consumer law such as the Consumer Guarantees Act. Misbehaving is not uncommon. The name Allan Halse is often raised. Halse and his company CultureSafeNZ was ordered in February this year by the ERA to pay $18, 000 for making disparaging remarks about an employer. It was not the first time Halse, his company and/or employees had 10

party and more generally in terms of the efficient and effective administration of justice… all of this is, of course, a matter for Parliament if it so chooses, not the court.”

Competence In her thesis, Dippie outlines several competence issues in relation to some employment advocates. The problems include not understanding the law and

the preparation of documents.

“Lawyers are required to have a law degree, a current practising certificate and complete 10 hours of continuing professional development annually.

Currently, advocates do not have any such requirements,” she says.

Santesso does not agree that advocates are necessarily less knowledgeable than lawyers. “I have an honours degree in law and I did my dissertation in employment law,” he says. “I’ve been admitted to the bar [but] none of that stuff actually prepared me. What helps you is just doing the cases [and] advocates do only employment law. So they are very experienced and very knowledgeable.”

Regulation Some lawyers argue that there is no need for independent advocates to exist. Others simply want the industry to be regulated, as conveyancers and immigration advisers were.

Pollak is in favour of banning all lay advocates except those who represent employers’ associations or unions.

“There is an inherent difference between representing an employee or a worker in court who’s part of an association as opposed to representing the public generally. You don’t get complaints from the authority or the court about representatives from employers’ associations or unions.”

Graeme Colgan, barrister and a former Chief Judge of the Employment Court, has described advocates as anywhere from appropriately competent at one end to the dangerously incompetent at the other extreme. “The same goes for their ethical practices.”

“The ERA and Employment Court see a not insignificant number of very poor representations of parties [and] of misbehaviour between advocates in negotiations and in writing. Even

Continued on page 11

Ashleigh Fechney

The real problem with a lot of advocates is they work on a no-win no-fee basis. And that goes up to about 40%

May 6, 2022 Issue 13

Continued from page 10

sometimes in hearings. That just shouldn’t be happening because it’s the clients who suffer,” Colgan says.

Nonetheless, Colgan doesn’t believe advocates should be banned.

“There’s an access-to-justice argument in there. I think they are such a part of the landscape now and fill a potentially valuable role in the market that they shouldn’t be banned. The rate of unionisation of all employees in New Zealand is so low [especially] at the vulnerable end of the market.

“So, these are people who simply can’t afford to have lawyers doing complicated cases. They are still important cases. And if you banned [advocates] entirely, then you would have them unrepresented.”

Colgan adds that there are some “ethical, professional, hard-working, reasonable-charging advocates who do fill a spot in the market”.

“The approach should be to regulate and, within regulation, to educate, so providing educational opportunities for advocates to advance.” A parallel, he says, is conveyancers or immigration advisers who used to be unregulated, but now are.

The advocates LawNews spoke with all supported regulation in some form and cited issues with the industry not dissimilar to those outlined by lawyers. Some see the cowboy end of their industry as not doing them any favours.

“I’m an advocate who is happy to be regulated,” Fechney says. “I am a member of the Employment Law Institute of New Zealand. And I’m also a legal aid provider, which is like another level of accreditation. On top of that, I’m actually now in the process of doing Stepping Up, which is the next course required to be a self-employed lawyer.”

Or, if Parliament didn’t want to go that far, an alternative to licensing

Members of the committee have experienced many examples where a client has instructed them after having been initially represented by an advocate and the client genuinely thought that their former representative was a lawyer could be to continue to allow advocates to appear in ERA cases but set up a system where they need to apply for leave to appear in the Employment Court, Fechney says.

Gelb adds: “[Advocates] should be regulated. Because, unfortunately, the industry that we’re in at the moment can appear to be like the Wild West. It’s disgraceful. It causes untold dramas for the legal profession, the other advocates [and] for the authority and for the Employment Court. The issue is how to regulate it.”

On the other hand, the push for change isn’t coming from clients who have been abused or didn’t get good service, Santesso says. “You don’t hear about people in the news saying ‘I was misled’ or there was any kind of problem.

This is gatekeeping. [Lawyers] make a lot of money off employment law.”

The solution Any solution is likely to be academic. The committee has asked the minister to add the issue to MBIE’s agenda, says Colgan. “The committee has said it would like to talk to [minister Michael Wood] about that. The impression I have is it’s not high on MBIE’s agenda.”

Opinions vary on what the solution could look like.

Pollak isn’t in favour of a new profession because it would create a second-tier legal system. “Why should we do that? It creates a huge new bureaucracy.”

But the committee is working

on a solution, with regulation being established by amendments to the Employment Relations Act and with its own set of regulations to be administered by MBIE. “Consideration would have to be given as to what activities were to be regulated, [such as] advice-giving, negotiation, mediation representation, appearances in the authority or the Employment Court,” Colgan says.

Regulating employment lay advocates would be governed by a statutory authority which included a licensing function and an independent authority to decide disputed questions about registration and misconduct, with rights of appeal to the Employment Court.

Stewart adds: “The committee believes that an important factor for any regulatory model is the requirement for advocates to prominently disclose that they are advocates and not lawyers.

If an advocate is legally qualified, they can state that but they should also state that they do not hold a practising certificate as a lawyer.”

Requirements for registration could include meeting certain standards of fitness and reputation, training and continuing education, Colgan says.

“There would be a code of conduct to which licensed advocates would have to adhere.” There might also be a requirement to hold a trust account.

The rules should also include regulations around advertising, including references to licensed status.

■

Graeme Colgan

Both contingency and percentage arrangements result in the advocate having a direct interest in the outcome of cases. This removes their professional independence and could incite overly zealous behaviour

11

FEATURED CPD

FINAL NOTICE

YOUTH JUSTICE PRACTICAL

Youth advocates conference 2022 In Person | Livesteam 4 CPD hrs Friday 13 May 10am – 2.30pm Presenters Judge Sharon Otene; Sergeant Darrell Cooper; Vanessa Curac; Gary Earley; Sally Kedge; Sarah Mandeno; Lila Tu’i and Maggie Winterstein

Personal effectiveness online workshop (May)

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May 6, 2022 Issue 13

adls.org.nz/cpd

Harm and revenge in the digital space

Webinar 1.5 CPD hrs Monday 30 May 1pm – 2.30pm Presenter David Harvey, retired District Court Judge Chair and commentator Arran Hunt, partner, Stace Hammond

cpd@adls.org.nz

09 303 5278

An update on the Harmful Digital Communications Act, this webinar will be a useful and timely refresher. It will cover principles, offences, case law and enforcement and be helpful to those practising in civil, criminal and family law, or with an interest in the interface between technology and the law.

OFFENCES CASES ENFORCEMENT

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Lessons from Lyttle DISCLOSURE COSTS INSIGHTS

Webinar 1.5 CPD hrs Tuesday 7 June 4.30pm – 6pm Presenter Christopher Stevenson, barrister, Pipitea Chambers (David Lyttle’s lawyer) Chair and commentator Julie-Anne Kincade QC, Blackstone Chambers

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The deportation process

In Person | Livestream 2 CPD hrs Wednesday 15 June 4pm – 6.15pm Presenters Richard Small; Deborah Manning; Bernard Maritz and Terri Thompson

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Conflict of laws

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Not just another trusts webinar

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Class and Funded Litigation: Knowing your Professional Obligations Tuesday 31 May | In Person | Livestream | 2 CPD hours Visit adls.org.nz for more information.

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LIVESTREAM

May 6, 2022 Issue 13

Continued from page 06

would constitute acceptance of the terms and conditions, as the wording above the green button did not directly refer to that button or the effect of clicking on it. As the court explained: ■ Clicking a button can be construed as assent only if the user is ‘explicitly advised’ that the act of clicking will constitute assent to the terms and conditions of an agreement. Without more, clicking on a button on a webpage “does not signify a user’s agreement to anything”.

The court noted this could have been remedied by including explanatory language such as “By clicking the Continue button, you agree to the Terms & Conditions.”

■ The fact that the text and the button appeared side-by-side was insufficient. Close proximity of the hyperlink to buttons or checkboxes, without a clear explanation of the relationship between the two, was not enough to amount to reasonable notice.

■ Even though the text directly referred to the substance of certain terms (summarising the requirement for ‘mandatory arbitration’) that did not mean customers were bound to those terms, absent an explicit explanation of how the terms would become binding.

On that basis, the court rejected the company’s arguments that the arbitration provision was effective and allowed the customers’ proceeding to continue.

Implications for New Zealand businesses The case highlights the importance of presenting online terms clearly to consumers, a principle which will apply in New Zealand in a similar way to the US. The case provides various valuable takeaways but in particular: ■ Links to terms should be transparently and conspicuously presented, in ‘traditional’ hyperlink formatting, which in the court’s view meant blue, underlined and capitalised. So, “TERMS AND CONDITIONS”, not “terms and conditions”.

■ Any links to the terms should be accompanied by a clear and prominent explanation of which specific step constitutes the act of acceptance. So, for example, making clear that ‘by clicking’ a particular button or checkbox, the customer accepts the terms.

These principles, and others described in our previous articles on similar cases (here and here) will assist with improving arguments for contractual enforceability, should online contracts be challenged.

These steps should also reduce risk under the ‘Unfair Contract Terms’ provisions of the Fair Trading Act, the application of which turns in part on whether the terms are ‘transparent’.

The upcoming extension of that regime to cover certain business to business contracts (discussed here) further heightens the importance of ensuring that standard form terms are conspicuously and transparently presented to customers.

Ahead of those changes, which take effect from 16 August 2022, businesses should carefully review their websites and standard form contracts, and consider afresh the clarity of the mechanisms through which they seek to bind customers to online terms. ■

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Richard Massey is a senior associate at Bell Gully ■ ADLS has an upcoming seminar on consumer law developments, see here.

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Hoops, Hooks and Hurdles for Trustees: New Reporting Requirements for Domestic Trusts Wednesday 25 May | 4.00pm - 5.30pm Webinar Gaining an understanding of the new reporting rules enacted under urgency and an insight into Inland Revenue’s operational approach to them, will make it easier to comply with the rules and to minimise their impact.

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Youth Advocates Conference 2022 Friday 13 May | 10.00am - 2.30pm Live Stream | In Person This year’s Youth Advocates Half-Day Conference will provide practically focused sessions on a range of pertinent topics presented by youth justice professionals.

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