LawNews- Issue 18

Contents

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

Editor: Jenni McManus

Publisher: ADLS

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Cover: Manuel Augusto Moreno / Getty Images

Photo: Maskot Getty Images

Battle

lines drawn for a stoush between ChatGPT and copyright law

Chances are that your average AI user has not reflected on whether his or her use of ChatGPT might infringe copyright

Steven Moe & Alex Summerlee

A legal brawl is brewing about how, and whether, copyright law should apply to the use of artificial intelligence chatbot, ChatGPT.

In one corner are authors who own copyright in their work; in the other are those who claim there is a public interest benefit in enabling content (or ‘output’) from AI such as ChatGPT to be exempt from copyright restrictions.

ChatGPT operates by harvesting the work of others to produce content for its users. The problem is that this output may breach the copyright of the original authors.

ChatGPT’s process works like this: the chatbot’s machinelearning algorithm mines vast datasets, including texts, websites, news articles and books to respond to users’ prompts. This process uses billions of parameters to statistically analyse complex language structures and patterns, from which it can produce sophisticated and surprisingly accurate content.

Authorship

To unpick this issue, it first needs to be asked who authors the text generated by ChatGPT? The person who put in the prompt? Or is it OpenAI, the company that released ChatGPT onto the market in November 2022?

Under the Copyright Act 1994, the author of a computergenerated work is “the person by whom the arrangements necessary for the creation of the work are undertaken”. Arguably, as the person inputting the prompts into ChatGPT, the user becomes an author of the output created by the AI.

OpenAI might also be a joint author. It has taken a stand on this and, perhaps surprisingly, its terms of use provide that

OpenAI assigns all title and interest in the output to the user. This suggests OpenAI considers it might have some claim to authorship but it is quick to divest itself of any title to that output.

And while output from ChatGPT might be authored by the user, that work may not itself attract copyright. For this to happen, the work must be original and to be ‘original’ the author must have exerted a sufficient degree of skill or labour in producing it.

Can it be said that the person inputting a prompt into ChatGPT exerted any skill or labour in producing the output? It is an arguable point: some consultants are forging new careers in creating the best prompts. Even if this is so, will some output end up being so similar to the work of others that it becomes a copy of another’s work?

Chances are that your average AI user has not reflected on whether his or her use of ChatGPT might infringe copyright. It is likely that many users intuitively think the AI is the author of any output. However, rightly or wrongly, the narrow description of who (and what) can be an author for the purposes of the Copyright Act probably means the AI itself is not the author.

The risks

The million-dollar question is whether there is a risk that a ChatGPT user might inadvertently infringe on someone else’s copyright work. For example, this could occur where the output reproduces a portion of copyright-protected material.

This raises several policy questions. Does the author of a copyright work have a legitimate interest in that work being

Continued on page 04

The narrow description of who (and what) can be an author for the purposes of the Copyright Act probably means the AI itself is not the author

Continued from page 03

protected from a ChatGPT user’s inadvertent infringement into that copyright? Is there a public interest in the benefits of AI for such output to be an exception to the infringement regime in the Copyright Act?

The Copyright Act provides for some exceptions, including, for example, the fair dealing exception. This means copyright in a work is not infringed “if such fair dealing is accompanied by a sufficient acknowledgement”. The trouble is that output does not provide (at least for now) any acknowledgement of what work has been trawled from the internet to produce its output.

What are ChatGPT users to do with this? Do they run the gauntlet and hope their output does not infringe on someone else’s copyright work?

Overseas solutions

Some work on this issue has already been done in the UK and in the European Union. Their laws have been updated to offer guidance around how copyright protections work in respect of AI-produced output.

They provide two models for AI exceptions, allowing what otherwise would be a copyright infringement, and give some idea of what reform of the Copyright Act, in respect of AI, could look like in New Zealand.

The EU has two copyright exceptions for text and data mining which specifically permit the use of data to train LLMs (the large language models that power ChatGPT). Broadly speaking, these exceptions provide for:

■ Text and data mining for the purposes of scientific research, innovation and education. This enables “non-commercial” research organisations and cultural heritage institutions to data mine (eg, universities, museums, etc.); and

■ A general exception from copyright infringement for anyone, including commercial enterprises, using text and data mining.

However, a rights-holder can contract out of this latter exception, meaning that the copyright holder can reserve the rights to carry out text and data mining of their work, and thereby prevent others from doing so.

The UK has taken a more narrow approach – so far. Its Copyright Designs and Patents Act 1988 provides a limited exception to copyright infringement, similar to the first category of EU exceptions.

The exception provides that text and data mining does not infringe copyright where it is done for the purpose of computational analysis for non-commercial research. Further, for the exception to apply, sufficient acknowledgement of the mined work must be given.

Some commentators have noted that these restrictive approaches do not allow for the full potential benefits of AI to be exploited. That’s why the UK government confirmed its intention to expand the scope of that exception to enable text and data mining of works protected by copyright and database rights for any purpose because of the benefits to artificial intelligence and wider innovation in the UK. However, the minister responsible for the policy faces strong opposition to the proposal.

While this article has focussed on the text generated by AI, another open question relates to images created using prompts. Should that be considered more as “art” with different protection?

Where to next?

There are myriad problems coming our way, along with new policy issues around the legitimate interests of authors who create content mined by AI versus societal interest in the advantages that AI data mining can contribute to the common good.

We’ll leave it for readers to weigh up how that tension should be settled. And if all else fails, we can always ask ChatGPT how it should be solved. ■

Steven Moe & Alex Summerlee are partners at Parry Field Lawyers in Christchurch ■ Click here for an upcoming CPD event.

Is there a public interest in the benefits of AI for such output to be an exception to the infringement regime in the Copyright Act?

A cautionary tale: what happens when trustees refuse a settlor’s reasonable request?

Perhaps, to solve the problem, it would be better for her to catch covid and die soon. We can keep her inheritance because with her alive, we won’t keep any of her inheritance. Perhaps it is a solution for her to die now

Anthony Grant

Belen Clarisa Velutini Perez, a wealthy Venezuelan, settled scores of millions of dollars on a trust.

At the age of 98, and with no spouse, no children and no immediate family, she wanted to use some trust funds for a building project but the corporate trustee objected.

Even though the Deed of Trust had a clause stating she was “entitled to ask the trustees to pay any part or parts of the capital of the trust fund to or for her benefit”, the trustee said Velutini had no business plan, no work program, no timeline and had done no budgeting. It said the project appeared to vastly exceed its anticipated cost and substantial additional work was still needed.

Velutini embarked on the project with other funds but ran out of money and was forced to stop work. A co-venturer in the project invoked an arbitration which she lost. The co-venturer was authorised by the arbitrator to seize goods from Velutini to the value of approximately US$4 million. Bailiffs entered her home and seized her possessions. She was terrified.

A Lord Balfour was responsible for the corporate trustee’s actions. In Velutini Perez v Equion Trust Corporation (UK) Ltd and Another [2023] WTLR 349 a High Court judge criticised emails that Balfour had sent to her assistant as “threatening” and “illjudged” and said Balfour appeared to have “lost all perspective”. The judge said Balfour’s emails were “high–handed, hostile and entirely inappropriate for an experienced trustee”.

Balfour worked in cooperation with a Charles Rack who was a protector of the trust. Rack could justifiably be described as “ the trustee from hell”. He was unwise enough to leave a voice message in which he criticised Velutini in these terms: “ …. perhaps, to solve the problem, it would be better for her to catch covid and die soon, and that will solve a lot of problems. We can keep her inheritance because with her alive, we won’t keep any of her inheritance.

Perhaps it is a solution for her to die now.”

When Velutini became aware of this extraordinary message, she feared for her life. Rather than wait for Rack’s wishes for her to die prematurely to be fulfilled, she arranged for the trust to be dissolved and a new trust created.

Balfour and Rack disputed the validity of the revocation of the trust and suggested she had lacked sufficient mental capacity when she revoked the trust and had been the subject of elder abuse when she did so.

To immunise themselves from financial risk, the former trustee took US$1.5m to cover its potential legal fees and the risk of having to meet other liabilities.

The High Court in London said Balfour and Rack had taken an inappropriately aggressive and threatening approach to Velutini and had incurred unnecessary costs. They had not acted neutrally or reasonably in refusing to hand over the assets of the old trust to the new and the trustee was entitled to only 70% of a standard indemnity. As I understand a separate costs decision, the former trustee was ordered to pay costs of which it would be personally liable to pay 30%.

According to The Daily Mail in Australia, Lord Balfour, an old Etonian and a descendant of two former English Prime Ministers, subsequently resigned from the corporate trustee through which he had acted and was “no longer a director of [it]” or of any companies associated with it.

Balfour was quoted in the Mail as justifying his decisions as a trustee: “When we questioned these unusual actions, which it would have been irresponsible not to do, given past history and new actors on the scene, we were hit with a writ. Our sole mission was always to protect Miss Velutini’s patrimony for her designated charitable foundations. Sadly, the court didn’t see it that way.”

The case is an interesting contemporary illustration of a trustee being held to have breached its duties to a beneficiary and the adverse financial consequences that a trustee in such circumstances can be personally liable to pay.

In 2022, Lord Balfour was ranked one of Britain’s best “offshore experts for high-net-worth individuals”. It is common in England, and increasingly in New Zealand, for lawyers to boast of the high ranking they have achieved from international rating agencies but I have a scepticism about the merits of many such rankings. I suspect many of those who read of Lord Balfour’s ranking might be sceptical too. ■

Anthony Grant is an Auckland barrister and trustee, specialising in trusts and estates ■

Anthony Grant Rack could justifiably be described as ‘the trustee from hell’

Letter to the editor

NZLS President responds to Gary Judd KC

Tēnā koe Gary

I acknowledge receipt of your public article of 12 May 2023 addressed to Misha.

We have noted your views, as we have noted the views of all those who have corresponded with the Law Society and completed the survey. There are a range of views in the profession regarding the recommendations contained within the Independent Review Panel’s report. The report itself clearly outlined that the profession was split on a number of the issues being considered. Lawyers did not have to fill in the survey (either the panel’s consultation survey or the survey relating to the recommendations) and could email submissions directly and some chose to do this. We have treated your article as a public submission.

It is important to note that the recommendation regarding the introduction of a new statutory provision relating to the Treaty of Waitangi principles relates to the functions of the regulator and not lawyers themselves. The majority of the independent review did not support including a reference to New Zealand’s constitution and Te Tiriti as part of a lawyer’s fundamental obligation to uphold the rule of law. The Independent Review Panel expressed its view on a number of rule of law issues in its executive summary and in chapters 5–7 of its Report

It is important that lawyers take the time to read at least the executive summary. We acknowledge that there are divergent views on this issue.  We have welcomed all views in relation to the panel’s report as the council and board are keen for as much feedback as possible.

Ngā mihi

Frazer Barton President New Zealand Law Society |

The editor responds

There is no question that lawyers are split on the two most significant recommendations from the panel: that an independent regulator should be appointed and that the principles of the Treaty of Waitangi should be incorporated into the legislation governing the profession. However, it should be noted that the panel’s report itself reveals (on pages 94 and 95) that a clear majority (44%) of respondents oppose the incorporation of the treaty into the regulatory framework compared with 35% in favour. This hardly provides the “strong case” the panel claims as a major part of its justification for adding an overarching treaty clause to the legislation. We also note that the panel’s report states a treaty clause would “guide how the regulator engages with the profession and the public and fulfils its function”.

We therefore struggle to reconcile how this supports your assertion that any treaty clause relates only “to the functions of the regulator and not lawyers themselves”. The panel’s own recommendation states that “all persons exercising powers and performing functions under this Act must give effect to the principles of the Treaty of Waitangi.”

Finally, we would draw your attention to an interview that Ron Paterson, chair of the independent review panel, did with The Platform’s Sean Plunket on 30 May.

Plunket, a former Morning Report host, asked Paterson no fewer than four times to define the principles of the Treaty of Waitangi. If they were so central to the panel’s work and recommendations, and all lawyers would be legally obliged to uphold them, what might these principles be?

Despite repeated questioning, Paterson was unable to articulate a single principle.

As Gary Judd KC noted in his opinion piece in LawNews on 12 May, the panel’s report isn’t fit-for-purpose. The government should rip it up and start again. ■

Te Kāhui Ture o Aotearoa

A win for the press, a big own goal for Ben Roberts-Smith: what this judgment says about defamation law

has to weigh what has been found to be true against what has been found to be unproven. If the true statements about the plaintiff were worse than the unproven statements, then the plaintiff’s reputation was not overall damaged by the unproven statements, and the publisher has a complete defence.

David Rolph

At the heart of the spectacular defamation trial brought by decorated Australian soldier Ben RobertsSmith were two key questions.

Had The Age, The Sydney Morning Herald and The Canberra Times damaged his reputation when they published in 2018 a series of explosive stories accusing him of murder and other crimes while in Afghanistan?

And could the newspapers successfully defend their reporting as true?

Last week in Sydney, Federal Court Justice Anthony Besanko found the newspapers were indeed able to establish the “substantial truth” of key allegations around killing of unarmed Afghan male prisoners.

An appeal may still be on the cards, but this is a high-profile loss for a very prominent person. The costs will be substantial. The usual rule is that the losing party pays its own costs and those of the winning party.

So, even though people say defamation law in Australia has a reputation for favouring plaintiffs, this case shows even plaintiffs do sometimes lose defamation cases in Australia.

More broadly, this case shows how hard it is to use defamation law to repair any perceived damage to your reputation. Once a case begins, you never can control what will be said in court.

The facts

The case centred on several defamatory meanings (or, as they’re known in defamation law, “imputations”) that Roberts-Smith said the papers had made against him.

Among these were that he’d killed unarmed Afghan male prisoners and ordered junior soldiers to execute others in Afghanistan between 2006 and 2012.

Roberts-Smith denied wrongdoing, but the newspapers had pleaded a defence of truth. That means to win this case, they needed to prove the meanings conveyed by their reporting – even if those meanings were unintended – were true.

Besanko, reading a summary judgment today, said the newspapers were able to establish the substantial truth of some of the most serious imputations in the case.

For other imputations, Besanko found the newspapers were able to establish “contextual truth”.

Substantial truth means what is sounds like – that the allegation published was, in substance, true. Defamation law does not require strict, complete or absolute accuracy. Minor or inconsequential errors of detail are irrelevant. What matters is: has the publisher established what they published was, in substance, true?

Contextual truth is a fallback defence. The court

In other words, Besanko found most of the imputations to be true. And, when considered against those which were not proven to be true, the remaining unproven imputations did not damage Roberts-Smith’s reputation.

Risky business

The court heard several explosive claims during the course of this trial, including that evidence on USB sticks had been put into a lunchbox and buried in a backyard and that Roberts-Smith had allegedly punched a woman in their hotel room.

Roberts-Smith said he didn’t bury the USBs or withhold information from a war crimes inquiry and denied that he had punched the woman.

But the fact this widely scrutinised case yielded such astonishing testimony, day in and day out, shows how risky it is to use defamation law to restore perceived injury to one’s reputation.

Defamation law is seeking to correct people’s views about the plaintiff. But it’s open to doubt that defamation law is actually any good at securing its own stated purpose of changing people’s minds about the plaintiff.

The problem is the law is a blunt instrument. It’s hard to get people to change their minds about what they think of you.

All litigation involves risk and defamation trials are

Continued on page 21

All litigation involves risk and defamation trials are even riskier

You never can control what can come out in court, as this litigation demonstrates so clearly

LawNews Recruitment

Legal labour market eases but litigation, insolvency still in demand

Diana Clement

The tight labour market for lawyers is easing. That’s unless the law firm or in-house team needs to staff teams in areas such as resource management, litigation and a few other in-demand roles, say recruiters.

The legal recruitment market tends to follow the fortunes of the wider economy. It’s not a surprise, therefore, says Kirsty Spears, director at McLeod Duminy Careers, that there are fewer jobs in the wider property sphere and banking, but that litigation and insolvency lawyers are in demand.

Overall, says Artemis Executive Recruitment managing director Kathryn Cross, her team is seeing a perceptible slowing in recruitment for the law firm market. “The heat has gone out of the urgency to hire for the law firms. But there definitely is still need for staff.

“One of the effects of the pandemic has been that we have been so intensely skill-short for such a long period of time [that] many teams are still running very lean, in terms of resourcing,” Cross says. “We aren’t seeing roles withdrawn.” There is still capacity to hire to service existing workflows or make the workflows more comfortable.

Anand Ranchhod, managing director at CoLegal, says the real sweet spot in the recruitment market is lawyers at intermediate and senior levels who can operate with a good level of autonomy and support partners.

Two words

When LawNews spoke with legal recruiters, the same two words popped up repeatedly: “resource management”. That’s because

Kirsty Spears

lawyers with resource management experience who are willing to change jobs are few and far between, especially at the senior associate level, Spears says. It was a story repeated by both Cross and Ranchhod.

“There just aren’t many of them,” Spears says. “It’s a supply and demand thing. It’s always the same with law. There are never enough of whatever [skills] they need. Never.”

Reforms and infrastructure projects are driving the demand, says Ranchhod. “[Employers] need people that can hit the ground running. It’s so busy with urban development projects, consenting issues and appeals.”

Also in demand, recruiters say, are litigation lawyers and those experienced in areas such as insolvency, debt recovery, insurance and construction disputes.

Litigation in particular was cited many times. Lawyers with law firm experience in any area that is not too niche will be snapped up in a heartbeat, Ranchhod says.

In part, the current shortages in resource management and litigation are due to the lag between graduates choosing a practice area which may be booming at the time and the demands of the market when they reach intermediate and senior levels, Spears says.

Litigation may look attractive as an option now, and property unattractive. Come 2030, the economic conditions may be the reverse.

“What will happen is in this quiet period, all the grads will come in and they’ll do litigation. Then in three or four years there will be

Continued on page 09

The real sweet spot is lawyers at intermediate and senior levels who can operate with a good level of autonomy and support partners

The heat has gone out of the urgency to hire for the law firms. But there definitely is still need for staff

RECRUITMENT

Continued from page 08

a shortage of commercial lawyers because they won’t have trained them.”

More caution

The legal recruitment market in 2023 isn’t about bums on seats.

“There is a focus on quality universally,” says Cross. “We’re seeing cautious hiring behaviour in the market, more scrutiny in the hiring process and increased focus on integrity of process, which we consider to be a good thing.

“Some firms, particularly in the pressures of the pandemic, hired very quickly and mis-hired. They don’t wish to repeat those mistakes. So there’s an extra overlay.”

They’re also watching for a recession on the horizon, although there are mixed views as to how impactful that will be, says Cross. “I think most hiring managers are cautiously optimistic.”

Spears is also seeing more caution from employers. “There are long-standing gaps that still need to be filled. But we’re sensing more caution in recruitment.

“We’re having conversations more along the lines of ‘well, if you see somebody good let us know, but we’re not really active’.

“So rather than being absolutely desperate to fill a role and get a bum on the seat, there’s a lot more deliberation. “

Cross notes that her team is seeing an increase in the number of what she would loosely refer to as “recession indicators”, which are likely to have an impact on the legal recruitment market.

“Things like an increase in the number of litigation, insurance and insolvency positions. And we’re starting to see a bit more has started to happen in the employment law space.”

By the numbers

Not all legal jobs are advertised on Seek.co.nz. However, many are and the job advertisements are still down on April 2019, the pre-covid baseline.

Currently, the number of job ads for lawyers is minus 19% compared to April 2019. There are 57% more applications per job in April 2023 compared to April 2019, although some of that could be attributed to changes in applicant behaviour.

Legal industry job ads and applications per job ad over time

April 2019 v April 2019 v April 2019 v April 2020 April 2022 April 2023

April 2019: pre-covid baseline

April 2020: the nadir of job ads (at the height of the covid onset) April 2022: post-covid boom (or close to, May 2022 was when NZ hit peak job ads as a whole)

A Seek spokesperson says the fact that job ads have not returned to precovid levels is unique to the industry. Many other industries experienced a boom

Continued on page 10

Are you ready for a great new job? We have some fantastic opportunities!

Artemis has the most experienced specialist legal recruitment team in New Zealand and a fantastic array of roles with leading organisations. We have the ability and expertise to find the role that is right for you. Here is a small selection of our current roles:

In-house – Auckland’s CBD, North, East and South – too many to list!

• Senior Legal Counsel – (Corporate/Commercial) (24-month FTC) –8+ PQE, Auckland CBD

• Associate General Counsel & Company Secretary (Commercial) –10+ PQE, Auckland CBD

• Associate General Counsel (Funds) – 10+ PQE, Auckland CBD

• Legal Counsel – 3+ PQE, Auckland CBD

• Partner / Director (Hybrid options) – 8+ PQE, Thames-Coromandel District

• General Counsel (Litigation) – 12+ PQE, Auckland

• Senior Legal Counsel – 5+ PQE, Grafton

• Senior Legal Counsel – 5+ PQE, Auckland CBD

• Legal Counsel – 1-5 PQE, Auckland CBD

• Senior / Legal Counsel – 5 PQE, Wellington CBD

• Senior Policy & Regulatory Compliance Officer, Wellington CBD

Want to know more?

For a confidential conversation about inhouse roles or to hear about what else is available, please contact:

Kathryn Cross BMus LLB 027 700 8049 | kathryn.cross@artemisnz.com

Lara Gordon BA LLB(Hons) 027 349 6352 | lara.gordon@artemisnz.com

Law Firm opportunities throughout New Zealand – too many to list!

• Commercial Property Lawyer – 4+ PQE, General Practice, North Shore

• Trusts Lawyer – 6+ PQE, General Practice, Grey Lynn

• Commercial Property Lawyer – 8+ PQE, Specialist Boutique Practice, Auckland CBD

• Corporate and Commercial Lawyer – 4+ PQE, General Practice, North Shore

• Resource Management Lawyers – from 4+ PQE, Auckland CBD and Bay of Plenty

• Senior Family Lawyers – from 5+ PQE, Manukau and Bay of Plenty

• Insolvency Litigator – from 6+ PQE, Specialist Boutique Practice, North Shore

• Civil and Commercial Litigators – from 3+ PQE, Auckland CBD and North Shore

• General Practice Lawyer, Leading Mid-Tier, Auckland CBD

• Senior Solicitor – Employment – from 3+ PQE, Auckland CBD

• Senior Associate – Corporate & Commercial – 4+ PQE, Auckland CBD

• Senior Associate – Property – from 7+ PQE, Tauranga

• Solicitor – Litigation – from 2+ PQE, Tauranga

Want to know more?

For a confidential conversation about law firm roles or to hear about what else is available, please contact:

Sarah Hilton BSocSc LLB 027 267 4157 | sarah.hilton@artemisnz.com

At Artemis Executive Recruitment, we connect remarkable people with great places to work.

Harmans is a long-established Canterbury law firm operating from modern offices in the Central City, located close to parking. We are committed to gender equality and the continued development of our lawyers’ skills and knowledge base.

Senior Lawyer or Associate – Seniors Law Team

A position is available for a senior lawyer or associate to lead, grow and manage our Seniors Law team. You must have sound knowledge and experience in seniors law, including wills, trust and estate planning, estate administration, ORAs, EPAs, rest home care and subsidy matters, and property ownership. Property law experience will be a requirement for this role, while prior staff management and team leadership would be advantageous. You will possess a desire and drive to build a practice of your own within the firm. There will be opportunity for career advancement for the right candidate.

As we value strong and long-standing relationships with our senior clients, you will have excellent inter-personal skills and be able to display empathy and patience. You will also need to be comfortable running seminars and writing articles on various topics affecting seniors, and have an ability to communicate clearly and effectively. We provide marketing resources to support this area of law.

Senior Lawyer or Associate – Trust Law Team

A position is available for a senior lawyer or associate to lead, grow and manage our busy Trust Law team. Both part-time and full-time candidates will be considered. The successful candidate must have sound knowledge and experience in trust law, including the establishment, administration, reporting and winding up of trusts. They must also be ambitious and enjoy this field of law. Property law and other asset protection experience will be a requirement for this role, while prior staff management and team leadership would be advantageous.

As we value strong relationships with our clients, the successful applicant will possess excellent inter-personal skills. They will also need to demonstrate a desire and drive to build a practice of their own within the firm. There will be opportunity for career advancement for the right candidate. We offer a competitive remuneration package commensurate with experience, in a friendly, fun, and supportive professional environment. Flexible working conditions are negotiable.

Please respond by email with a curriculum vitae, academic transcript, and covering letter to Practice Manager, Julie.knowles@harmans.co.nz

Continued from page 09

in job ads in May/June 2022 that saw them rise far above their pre-covid levels.

“In fact, despite job ads levelling off since the great jobs boom of last year, most industries remain higher than their pre-covid levels as at April 2023. Legal is one of only eight industries from a total of 28 industry categories where job ad levels have declined since April 2019,” he said.

Job ads for the top 3 subclassifications within Legal over time (Top 3 ranked by job ad volume)

April 2019 v April 2019 v April 2019 v April 2020 April 2022 April 2023

Heading overseas

Despite much-higher-than-expected net migration figures in the past few months, Spears says she is not seeing large numbers of returning New Zealand lawyers looking for work. The trend is still in the opposite direction, with young lawyers heading overseas, especially to London and Australia.

How long they will stay, with recession looming globally, is the question. “The markets over there, we’re hearing, are a little bit subdued. The opportunity is not the same as it was maybe a year or even six months ago.

“In the past where we’ve seen recessions kicking in, what has happened [is] when they get there, they haven’t had fabulous jobs that have forwarded their careers. They’ve just gone for the adventure and then come back. The trend is looking like that might be where we’re headed.”

The only anomaly is that it’s not just second- and third-year lawyers leaving for an OE, Spears says. Some in their fourth or fifth year who would have been due an OE slap bang in the middle of the pandemic, are doing it now.

“There’s still a little bit of a backlog of slightly more senior lawyers taking an OE. Because of the types of visas, they have a very small window to go, based on age.“

The other geographical trend, says Ranchhod, is a movement of lawyers looking to relocate from regional areas to bigger cities. “That [might be] because of lifestyle reasons or family reasons.”

In-house

Cross, like Spears and Ranchhod, is seeing a healthy level of recruitment for inhouse lawyers. “There are more newly created roles in the in-house environment than there are in law firms,” she says. “And part of that is a desire to reduce external legal spend.”

Ranchhod says that unlike law firms where lawyers are a revenue generator,

Continued on page 11

Continued from page 10

in-house lawyers are a cost to business and he is seeing the need for a strong business case before those hires are made. Nonetheless, he has seen steady hiring.

“The majority of those hires are at the five-plus year level, because New Zealand’s in-house legal teams are often lean. They need people who can work with a good degree of autonomy.”

Some of the more recent inhouse legal counsel jobs CoLegal has filled include hires for the property and infrastructure sectors. “We had one for an insurance organisation, which had a couple of bigger projects they were expecting.”

Partners

At the top end of the recruitment market, Ranchhod is seeing demand for partners. “We are still seeing firms interested in expanding their partnership, particularly if they have a gap within their current practice that they want to grow or it’s a complementary practice area to other work they do or they want to bolster.

“The fit’s important, as is the transferable client base that [the candidate] might have, and what synergy there might be with the firm’s current client base and practice offering.”

The most demand for partners is in the corporate and commercial law practices, he says. “They tend to be the engine room from which other work can flow. If, for example, you have a client doing work in the mergers and acquisition space, then there might be property or employment law aspects of that transaction, which can feed into the other teams.”

He says there is demand in particular for litigation and employment law partners, and seniors moving from a senior role into their first partnership.

Candidate demand

When it comes to what candidates are looking for, Cross says

they are giving greater scrutiny to the integrity and the quality of opportunities.

“For example, there is a lot more questioning from our candidate community around the industry [and] there is also more scrutiny from the candidate perspective on things like the different package components. They’re not just looking at the base salary. They’re really drilling into the details of short-term incentives and any other benefits that the firms offer.

“There’s still a lot of focus on flexibility in working from home, [although] there is a slight shift towards more working in the office. These days, three to four days in the office is increasingly standard, and often preferred. But I don’t think we’re ever going to get away from the flexibility. People enjoy that flexibility.”

Spears is also seeing a move away from the hybrid model of working. She agrees that where lawyers may have worked two or three days from home during the pandemic, that’s more likely one day now.

“Firms are keen for people to come back in [and] employees themselves are keen to be coming back,” she says. “They’re liking being back in the office and being around people.”

Spears plans to survey the market for her 2023 annual research report, about the transport problems in Auckland and how they have affected lawyers’ views on hybrid working. “That’s obviously quite a major thing at the moment,” she says.

Salaries

Salaries are rising, Spears says, although in line with inflation rather than ahead of it. “There have been big jumps [as] clients have tried to keep pace with inflation and any corrections from covid times.

“Somewhere between seven and 10% is what most people are looking at in this round. That’s just what we’re seeing so far.”

She says with the job market being quieter and the workflow not as reliable, the next pay round “might be a little bit more interesting”. ■

Some firms, particularly in the pressures of the pandemic, hired very quickly and mis-hired. They don’t wish to repeat those mistakes

Kathryn Cross

We’re having conversations more along the lines of ‘well, if you see somebody good let us know, but we’re not really active’

Photo: sorbetto / Getty Images

HR departments: helpful or horrible?

Diana Clement

What is the role of human resources departments in corporates and professional services firms? Should HR staff be treated as trusted confidantes, hired to support employees? Or are they simply spies for the boss?

In many organisations, HR departments are genuinely committed to advocating for employees’ rights, wellbeing and fair treatment. They are intended to serve as a bridge between employees and management, ensuring fair and ethical practices within the workplace. Their role is to ensure compliance and that the employer is meeting its legal obligations.

But ultimately, they are first and foremost a tool of management, says Blair Scotland, a partner at specialist employment law firm Dundas Street.

“There are a lot of myths and misunderstandings and it’s important to have that degree of clarity,” he says. “Does HR simply work on behalf of the employer? Well, yes, it does.

“HR staff, like all employees, have a duty of fidelity and good faith towards their employer. Those key legal duties supplant anything else. You need to be aware that when you’re going to HR, you’re going to the employer unless there are procedures around confidentiality.”

For employees labouring under any misapprehension that HR will go into bat for them against an employer’s interests, this could be a problem, Scotland says, “because you would come to a hard crashing realisation that that isn’t the case”.

It is, however, more complicated. The HR department also has a duty to advise management and best practice advice isn’t always what may appear intuitively to an employer.

Management may prioritise the money coming in from a highearning partner over the needs of more junior employees. That black-and-white approach can, and does, sometimes backfire spectacularly.

Allowing the partner to continue to wreak havoc or other such decisions can be short-sighted and bad PR, Scotland says.

The best interests of the business aren’t just about how much a partner brings in.

“Let’s say, we had a partner who was known to be horrible to employees. The leadership of the firm may say ‘well, yeah, okay, we realise this person’s a problem’. But he brings them big amounts of money. That’s a hypothetical example.”

Trust lacking

A 2022 Trust in HR report from cezanne in the UK found that almost half (47%) of employees didn’t trust HR to help with conflict resolution. More than two in five (45%) of respondents didn’t believe HR would act impartially, while 43% believed senior staff members were favoured.

Compared to people at low-trust companies, cezanne found that at high-trust companies 74% reported less stress, 13% fewer sick days, 50% higher productivity and 40% less burnout.

Ignoring HR

Law firms ignore HR advice at their peril. When made public, unsafe work practices such as bullying and harassment make for bad publicity which may deter potential clients.

Thanks to the #MeToo movement, it’s increasingly difficult to hide bullying and harassment. In the case of law firms, it’s also likely to breach the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. Lawyers must report misconduct to the New Zealand Law Society. Those being harassed can consider a complaint to the police or to the Human Rights Commission

Hitting the headlines is another business risk of turning a blind eye to unsafe practices and ignoring HR’s advice.

One of HR’s roles is to recruit and maintain a stable workforce. “In a law firm, the biggest asset is the people,” says Scotland. Publicity around misbehaviour by partners makes that job a

Continued on page 13

HR staff, like all employees, have a duty of fidelity and good faith towards their employer. Those key legal duties supplant anything else

You need to be aware that when you’re going to HR, you’re going to the employer unless there are procedures around confidentiality

Continued from page 12

whole lot more difficult.

Unsafe work practices

Misconduct in law firms in the late 2010s was one of the issues that led to the formation of the Aotearoa Legal Workers Union [ALWU], says barrister and president of the ALWU, Oliver Neas.

“Initially, the main catalyst was the concerns about bullying and harassment in the industry. At the same time there was a recognition that underpinning that there’s a whole lot of structural issues with how the employment model in the legal industry works.”

While the priorities are still around growing membership and supporting members to organise and gain collective agreements, the ALWU also provides advocacy for members with grievances and can refer them to a pro bono employment law panel.

Neas says there has been a change in expectations of treatment of younger lawyers in recent years. But he’s still surprised when new cases of inappropriate behaviour emerge. “In the last few months there have been a couple that have made the news - instances that I wasn’t aware of - so clearly, it’s not fixed.”

Many of the unsafe work practices within law firms leave alleged victims stuck between a rock and a hard place. They range from sexual harassment and bullying, down to chronic, unsafe conditions from overwork that lead to burnout, Neas says.

The problem is that HR in law firms is limited in the responses it can offer to unsafe work practices such as long working hours and a lack of overtime pay.

“There’s no incentive for firms to properly manage their staff to ensure they’re working safe hours. At the moment, for every hour that an employee works after 5.30pm it’s time that the firm can bill a client without paying [its] staff. So essentially, it’s all upside to the firm.

“[That] puts all the burden on the employee to manage those

expectations, which they’re essentially powerless to do. If you’re a graduate lawyer, you’re very rarely going to push back.”

Going to HR isn’t going to help, Neas says. “The idea of introducing paid overtime or contractual entitlements for employees to improve their working conditions is just not something that’s on the table because that’s not in the employer’s interest. It’s not the fault of HR itself. It’s just a reflection of the job.”

Neas says an ALWU survey in May suggested that working conditions are getting worse.

Nothing to see here.

HR’s role in law firms came under the microscope in 2018 when Russell McVeagh collected flak in the media for its handling of sexual misconduct claims against two senior lawyers.

The controversy shed light on broader issues within the legal profession. When Dame Margaret Bazley investigated the Russell McVeagh allegations, she was surprised at how rife bullying, excessive hours, sexism and unconscious bias were within the industry.

Many law firms took notice of the scandal and her report. None wanted to be the next Russell McVeagh and some are said to have improved considerably. But not all.

“The evidence from the law firms is that they’re no different from the rest of the country,” says Jarrod Haar (Ngāti Maniapoto and Ngāti Mahuta), Professor of Management and Māori Business at Massey University.

“Roughly 20% do a great job, looking after their workers across all things like sexual harassment, bullying, racism and general support. My research [would suggest] about 60% are in the middle of that bell curve, and 20% are absolute stinkers. It’s disappointing to me, obviously, but it also doesn’t surprise me that we see law firms having such bad PR.”

The big challenge in HR within legal firms is balancing the challenges of a partner who brings in a lot of money but behaves

Continued on page 14

If the CEO doesn’t take HR’s advice, I think you need to shrug your shoulders and go ‘that’s a pity’ and just get on with it

Does HR simply work on behalf of the employer? Well, yes, it does.

Continued from page 13

badly. “[Management] thinks: ‘wow that person is such a star performer, money-wise. It’s just unfortunate that they have terrible workplace behaviours’. We shouldn’t be accepting that.”

Haar says he would like to think that HR should always be the workers’ friend, but some departments don’t always manage this well.

“HR can say [to management] ‘hey, this is the law and we need to follow ABC’. And senior leadership says: ‘nope we’re just going to do C’. [HR] goes ‘well, you’re the man, you’re the boss, but we really legally have to be going through these different steps’. And management is not interested.

That is a challenge for HR in law and other professions where leadership just ignores advice. “If the CEO doesn’t take it, I think then you do need to shrug your shoulders and go ‘that’s a pity’ and just get on with it.’

Haar says when businesses get in trouble in circumstances that have played out in law firms, he suspects there are a lot of “I told you so” thoughts going on in HR departments.

The other area where it can be complicated for HR is where perpetrators deny everything or fight back.

It’s a complex situation, Haar says. “If I say, ‘Diana is bullying me’, but when HR speaks to Diana she says, ‘you know, Jarrod’s not performing well and I’m trying to performance-manage him’, straight away there is a grey area.”

Be proactive

One answer to workplace safety issues that could overcome any potential conflicts of interest in the HR department is having a union presence in the workplace. It helps members share problems, Haar says.

Engaging coworkers enables an employee to be confident that they’re not imagining the behaviour, although there won’t always be more than one victim. “Some bullies are very, very sneaky at perpetrating those behaviours behind your back or only to you, when there’s nobody else to witness it,” he says.

“I don’t think you should ignore HR. You could go to HR and say, ‘hey, I’m bringing this to your attention, I’m going to give you two weeks to get back to me’.

“Or you could just say: ‘I’ve also been to my union because

I want to make sure I’m represented. So, when you start an investigation, they will represent me’.

“I think you do need to be proactive. Go to HR [and] say, ‘Hey, I’ve been treated badly. And I need some help here’. Of course, if they don’t do much [then it might be time to] leave the job.”

Growing awareness

The change in culture has accelerated in recent years at many law firms, in part thanks to Russell McVeagh’s experience.

MinterEllisonRuddWatts HR director Christine Brotherton accepts there are problematic people in power in every industry, but legal workplaces are striving to improve.

“I feel, for law, so much work has been done [to improve] workplace culture, leadership, the environment and ensure there are safe workplaces. A lot of law firms are actually leading the way in culture and how people feel.

“We’ve got to make sure that everyone feels respected as an individual, has a voice and feels comfortable to be able to speak up.

“From our perspective, and I’m sure it’d be the same for peers in other firms, it really does go beyond what’s the bare minimum requirements in regard to legislation.”

She says MinterEllisonRuddWatts is “not a stuffy firm, from years ago.

“We’re relevant. We have diversity and we have people who feel included and have a voice.” Having a seat at the management table helps, Brotherton says.

She views HR as an employee’s advisor rather than a friend.

Where an employee has an issue to raise, they can do so confidentially. “My team and I feel that people come to us because they trust us to be able to understand, to hear what the particular problems or issues or concerns may be. We keep that private.”

If the issue needs to be taken beyond HR, then the employee’s confidence wouldn’t be broken without permission. “We take them through what that could look like, so they feel that there’s control with regard to being attributed or not. And we advise about what the best solution may be.”

Where issues do arise about more senior employees’ or partners’ conduct, HR’s role would be to work with that person and give training around expectations and better ways to convey their messages, she says. ■

The problem is that HR in law firms is limited in the responses it can offer to unsafe work practices such as long working hours and a lack of overtime pay

There’s no incentive for firms to properly manage their staff to ensure they’re working safe hours

How the courts are treating franchising disputes

Stewart Germann

As we discussed last week, while there are no franchise-specific laws in New Zealand, franchisees are protected by the Fair Trading Act 1986, the Commerce Act 1986 and the Contracts and Commercial Law Act 2017.

Consideration should also be given to the Commerce (Criminalisation of Cartels) Amendment Act 2019. This introduced a new criminal offence for cartel conduct and the proposed new criminal sanctions reflect the covert nature of cartels and the harm they cause to consumers and the economy.

The Commerce Act 1986 provides several statutory exceptions that would not constitute a cartel arrangement and may be pro-competitive. These exceptions relate to collaborative activities (eg, joint ventures or franchise arrangements), joint buying, vertical supply contracts and specified liner shipping arrangements.

There are no defences for mistakes of fact relating to the elements of joint buying and promotion and vertical supply contracts. Therefore, it would be possible in the future for a director of a franchisor company to be criminally liable under the Act for a cartel offence.

For an individual who commits an offence, the penalty on conviction could be imprisonment for a term not exceeding seven years or a fine not exceeding $500,000, or both. For a company that commits an offence, the penalty could be up to $10 million, so great care must be taken.

Cases relevant to franchising

Green

Acres Franchise Group Limited v L & K Ferrick & Or

[2021] NZHC

997

The plaintiff was the nationwide franchisor of the Green Acres System and the regional franchisee for Hawke’s Bay following the assignment of the master agreement on 4 February 2013.

L & K Ferrick was the subfranchisee in the Hawke’s Bay area. The directors were the guarantors although they never signed

the agreement.

On 31 October 2020, the master agreement expired. A new agreement was not signed between the parties, but Ferrick continued to operate in accordance with the agreement. On 29 November 2020, the solicitors for Ferrick wrote to Green Acres alleging breaches of the agreement which were raised with the previous regional franchisee nine years earlier. The letter confirmed that the first defendant would not renew its franchise and would “cancel any residual holding over by the franchisee in relation to the now expired franchise agreement”.

Green Acres rejected the allegations and that the first defendant had grounds to cancel the agreement. It advised it would continue to perform the agreement and sought confirmation by the following day that Ferrick would also continue to perform the agreement. There was no response to this letter and on 3 December 2020 Green Acres cancelled the agreement, effective immediately. The solicitors advised of the application of clause 15 (consequences of termination which set out the obligation to return all intellectual property and all phone numbers used in the business – customer information) and clause 16 (restraint of trade for two years within New Zealand). There was no response to this letter.

Green Acres found out later that Ferrick had created a new company (New Ferrick Company) with the same directors and shareholders to Ferrick and put Ferrick into liquidation. The New Ferrick Company carried out the same work as the franchised business. Green Acres also engaged a private investigator who observed on 17 and 18 December 2020 Ferrick carrying out lawn and garden work at three separate areas in the Napier area.

Green Acres asked the liquidator to confirm that it held the customer information but the liquidator did not reply. Green Acres applied for an interim injunction, alleging breach of the restraint of trade, breach of confidence, interference with contractual relations and unlawful means conspiracy.

Continued on page 16

The party attempting to enforce restraint must show that there is a proprietary or legitimate interest justifying the restraint, and that the restraint goes no wider than is reasonably necessary to protect that interest.

Stewart Germann

In the final of a two-part series, Stewart Germann covers recent case law and describes how cartel and privacy law apply to franchising

Continued from page 15

Green Acres argued that the director Ferrick had continued to service Green Acres clients in breach of the restraint clause, using the customer information which was the intellectual property of Green Acres and those obligations were reinforced by the confidentiality obligations in clauses 9.13 and 19.1(b) of the master agreement. Ferrick argued it was in liquidation and no longer trading, the terms relied on by Green Acres did not survive termination as there were previous disputes with the old regional franchisee, the information was not adequately identified and that the customer information was not the intellectual property of Green Acres.

The court found for Green Acres and said it was arguable that the defendants deliberately retained the customer information and refused to return it to Green Acres. Furthermore, the customer information was adequately identified and confidential. Green Acres wanted the restraint to apply only to Hawke’s Bay which was reasonable and only to Ferrick.

The court granted the interim injunction. Although a liquidator was appointed for the franchisee, the court allowed the proceedings to continue, saying it was uncertain as to what information the liquidator had and it had not been forthcoming about the requests that it held the information requested.

Water Babies International Limited v Williams & Ors [2020]

NZHC 1289

The application was for an interim injunction against Kelly Williams, a former franchisee in Wellington, as the first respondent, Silvana Tizzoni as the second respondent and Coral and Aquamarine Limited as the third respondent.

In essence, the franchise agreement with Kelly Williams expired and was not renewed. However, she was devious and involved a relative, Silvana Tizzoni, and her company to operate a similar business in Wellington under the name of Swim Babies. There was extensive correspondence between Kelly Williams and Stewart Germann Law Office, and Water Babies UK instructed the issue of interim injunction proceedings.

The case was heard at the High Court at Wellington on 3 June 2020 and on 10 June. Justice Doogue delivered his judgment and issued an interim injunction restraining Kelly Williams from divulging confidential information and requiring written undertakings from Kelly Williams and Silvana Tizzoni. Interestingly, the judge issued a minute two days later correcting some of the text of the orders that were initially incorrect. The case has been settled but the judgment confirms the importance of restraint on competition clauses in franchise agreements in New Zealand.

M and L Holdings (2012) Limited v Whenua Productions Limited & Anor [2020] NZHC 2541

The plaintiff was the area franchisee of a business that provided photography services to real estate agents to help

market properties. The system is known as Open2view.

It granted the first defendant the right to operate a franchise in an area described in the agreement as Auckland South. The defendant decided to stop operating the business and when the plaintiff discovered the defendant had abandoned the business and was carrying on the same business under another name using the same customers in the territory, brought proceedings in the High Court seeking an injunction restraining the defendant from breaching the restraint of trade provisions, an account of profits, damages and costs.

No opposition was filed and the interim injunction was granted unopposed. The High Court expressed doubt that a restraint covering an area of 50 kilometres beyond the franchise area was a reasonable restraint but it accepted that its reasonableness was seriously arguable. The interim injunction extended to 50 kilometres. After the granting of the injunction, the lawyers negotiated a settlement that involved the defendant paying a sum of money to the plaintiff and also undertaking not to carry on a similar business within 50 kilometres of Auckland South.

Mad Butcher Holdings Limited v Standard 730 Limited & Ors [2019] NZHC 589

This case relates to the enforceability of restraint of trade clauses in relation to the Mad Butcher franchise system. Standard 730 Limited, as the franchisee, had been a franchisee of the Mad Butcher franchise system at Whangarei since 1987 and the franchise agreement came to an end on 4 January 2019.

Mr Wightman of the franchisee initially indicated to Mad Butcher that he intended to set up a butcher’s training school. However, on 7 January 2019 he advised the franchisor that instead he would continue to trade as an independent butcher. Wightman had by then arranged with the landlord to stay in the premises on a monthly tenancy after the lease expired. After the franchisee commenced trading as an independent butcher, legal proceedings were filed seeking an interim injunction to restrain the franchisee from trading.

The franchisee argued that he was not in breach of the restraint of trade clause because there was no other Mad Butcher franchise store in the Whangarei area and that he was not in competition with the franchisor. He said the franchisor had no intention of establishing another Mad Butcher franchise in Whangarei and therefore there was no legitimate interest to protect in the Whangarei area.

Gault J found there was a strong argument that the plain meaning of the restraint of trade clause was that it applied regardless of whether there was an existing Mad Butcher franchise store in the designated area. The judge acknowledged there was some force in the franchisee’s alternative argument that the restraint could be unreasonable if the franchisor had no intention of competing or continuing business in the region.

Continued on page 17

Franchisees should consider the risks of the restraint being enforced before entering into or breaching restraints of trade

Continued from page 16

The judge also dealt with the issue of whether, if the franchisee was able to establish a breach by the franchisor that would have justified cancellation of the franchise agreement, the franchisee would not be bound to perform the ongoing restraint. He accepted such a proposition was arguable and referred to Health Club Brands Limited v Colven [2013] NZHC 428.

Gault J concluded that his initial impression was that the franchisee would have an uphill battle establishing breaches by the franchisor sufficient to release the franchisee from performing ongoing obligations in the franchise agreement. He determined that the balance of convenience lay in favour of the franchisor, finding that damages would not necessarily be an adequate remedy for the franchisor.

The franchisee subsequently filed an application for leave to appeal the interlocutory judgment issued by Gault J to the Court of Appeal and for a stay. The application was opposed by Mad Butcher.

At the hearing, the judge gave his reasons in more detail for an interim injunction and then looked at the argument for leave to appeal. The judge said he was “conscious that I am being asked to review the correctness of my own decision . . . I must assess whether there is an arguable error . . . I have not identified an arguable error”.

The judge dismissed the application for leave to appeal and the previous orders were confirmed.

Data protection and data privacy

It is important for franchise parties to prevent data privacy violations. Both franchisors and franchisees will collect information pertaining to their employees, customers and suppliers.

Franchisees must evaluate the information and how to protect it. They should conduct data mapping - an internal audit process allowing the franchisee to determine what types of personal data it is receiving, where it is being stored, why it is being collected and how long the franchisee intends on keeping the data.

All of these processes must be set out in a privacy policy issued to customers and employees. The modern threat to this is the increased collection and use of personal information which is essential to the operation of all government and other agencies. Furthermore, with the advent of AI processing tools such as ChatGPT, franchisees must be careful of personal information being disseminated without that person’s consent.

In New Zealand, the right to privacy is a fundamental human right and is governed by the Privacy Act 2020. The Act endeavours to control by statute the four ethical issues involved, being privacy, accuracy, property and accessibility. The essence of the Privacy Act is the identification of 13 information privacy principles which were established by the OECD in Paris.

Franchisors must take an active role in protecting stored data and complying with regulations. In the event of a data breach or public violation of data privacy regulations, there will be a direct harm to the brand regardless of who is responsible for the violation.

Accordingly, franchisors must remain cautious of potentially non-compliant activities by franchisees. They must ensure all franchisees conduct their businesses to high standards to ensure compliance with the laws.

Franchisors can require written confirmation from franchisees that they have complied with any changes to data collection and data privacy laws and require that any changes will replace a current data protection plan. When a franchise ends, the covenant against competition should prevent a franchisee from stealing the data.

Conclusion

If you consider the cases discussed in this article, there is a trend to enforce restraint of trade provisions in favour of franchisors where there is a strong established brand. However, each restraint of trade scenario needs to be examined on its merits, and no one can assume that because there is a franchise system involved the restraint will be upheld.

The party attempting to enforce restraint must show that there is a proprietary or legitimate interest justifying the restraint, and that the restraint goes no wider than is reasonably necessary to protect that interest.

The decisions in the cases discussed, especially the recent Water Babies case and the Open2View case, will leave franchisors feeling confident about the enforceability of their restraints, but nothing is certain. The cases where the courts have been prepared to uphold restraints involve successful and well-established systems with strong brands, systems and a strong network of franchisees.

Therefore, in relation to interim injunction applications, the courts will recognise the need for enforceable restraints of trade to protect a franchisor’s goodwill.

Where the case is strong, the courts are willing to enforce a restraint of trade even where there will be significant cost and difficulty for the restrained party, and the remedies can even include forcing a restrained party to rejoin a franchise system it is in dispute with, pending the outcome of the trial.

Franchisees should consider the risks of the restraint being enforced before entering into or breaching restraints of trade. ■

Stewart Germann is a partner at the Stewart Germann Law Office ■

Correction: A gremlin appears to have taken over page 12 of last week’s issue of LawNews and inserted a quote next to Stewart’s copy which has nothing whatsoever to do with what he wrote. LawNews regrets the error, apologies to Stewart and readers who may be been confused.

There is a trend to enforce restraint of trade provisions in favour of franchisors where there is a strong established brand

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GOULD

Brian Albert

• Late of 3/406 Great South Road, Papatoetoe, Auckland

• Divorced

• Aged 72 / Died 19’04’23

MCDONALD

Bruce Duncan

• Late of 53 Aroha View Avenue, Te Aroha

• Aged 66 / Died 26’04’23

NAOUPU

Faamolemole

• Late of 12 Milton Road, Papaptoetoe, Auckland

• Cleaner

• Aged 76 / Died 20’09’22

RESCHKE

Jennifer

• Late of 1 Ocean View Road, Milford, Auckland

• De facto

• Painter

• Aged 24 / Died 11’05’23

ROBINSON

Leslie James

• Late of 53 Judds Road, Masterton

• Never in a legal relationship

• Dominion newspaper delivery person

• Aged 68 / Died between 01’05’23 and 04’05’23

VICKERS

Anthony Michael

• Late of 63 Hogans Road, Glenfield, Auckland

• Single

• Retired Motor Mechanic

• Aged 64 / Died 03’04’23

Continued from page 07

even riskier. You never can control what can come out in court, as this litigation demonstrates so clearly.

Roberts-Smith has sued to protect his reputation, but in doing so, a range of adverse things have been said in court. And whatever is said in court is covered by the defence of absolute privilege; you can’t sue for defamation for anything said in court that is reported accurately and fairly.

The 2021 defamation law reforms

The law that applies in the Roberts-Smith case is the defamation law we had before major reforms introduced in July 2021 across most of Australia.

These reforms introduced a new defence known as the public interest defence. To use this defence, a publisher has to demonstrate that they reasonably believed the matter covered in their published material is in the public interest.

As this defence didn’t exist prior to 2021, the publishers in the Roberts-Smith case used the defence of truth.

If a case like this were litigated today following these reforms, it is highly likely the publisher would use the new public interest defence.

Given the Murdoch versus Crikey case was settled, we may yet wait some time to see what’s required to satisfy the public interest test in a defamation case. But as today’s decision demonstrates, sometimes the truth alone will prevail. ■ David Rolph is a Professor of Law at the University of Sydney, specialising in media law ■

The above first appeared in The Conversation and is republished with permission

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

Business For Sale

Boutique Suburban Legal Practice By Negotiation

Wellington Central Successful legal practice in one of Wellington’s most thriving and growing suburbs.

The practice focuses on the legal needs of the community and includes Property Conveyancing, Trusts, Wills, Estates and Elder Law.

Would be well suited to an established law firm looking to expand, or an individual who is looking for an opportunity to operate independently.

linkbusiness.co.nz/WL00529

Dave Morgan 021 471 992

dave.morgan@linkbusiness.co.nz