LawNews - Issue 40

NEWS Nov 10, 2023 Issue 40

Inside ■ TRUSTS

Making civil litigation cheaper P06

■ COMMITTEES

Meet committee convenor Joanna Pidgeon P08-09

Is access to banking a

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HUMAN RIGHT?

Contents 03-05 BANKING HUMAN RIGHTS REGULATION

Can banks sack ‘undesirable’ clients?

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The unforeseen consequences when AI writes the news

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08-11 COMMERCIAL INSURANCE FRAUD

Case note: High Court clears CBL pair of criminal fraud

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EVENTS

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Nov 10, 2023 Issue 40

BANKING/COMPETITION

Banking inquiry told BNZ tried to ‘sack’ controversial religious community as a client Even where alternatives were not available, banks asserted an ‘unconstrained ability’ to end their services for any reason

Justice Helen Cull continued the injunction, finding that closing the community’s bank accounts would detrimentally affect its position until the matter went to trial.

‘Socially unacceptable’ Reweti Kohere

The market study appeared to be ‘a game played by professionals against us amateurs’

After a recent run-in with the Bank of New Zealand, Gloriavale has warned the country’s competition watchdog that customers are being segregated into “desirable” and “undesirable” consumers.

In a submission to the Commerce Commission on its personal banking services market study, the West Coast religious community said its “recent experience of vulnerability” has highlighted the need for reform and clarity for “certain segments of society”.

Gloriavale’s 40-year relationship with the BNZ ended abruptly in June 2022 after the bank said it would close the isolated community’s accounts because the bank’s human rights policy had been breached. BNZ relied on an Employment Court decision issued a month earlier that found three former Gloriavale members were, in the eyes of the law, “employees” from the age of six until their departures.

Other banks reportedly turned Gloriavale away, forcing the religious community to seek an urgent interim injunction to stop BNZ from closing its accounts. Without the court’s protection, Gloriavale said, payments made for its most basic functions – including medical care, rates, food and clothing – might be jeopardised.

Gloriavale succeeded. On the without-notice application, Justice Rachel Dunningham accepted there could be constraints on the exercise of the power to terminate a contract, “particularly given the importance of banking facilities to function in today’s society”. The judge found the balance of convenience and the overall interests of justice lay with Gloriavale.

Before Justice Cull, BNZ argued that continuing to provide banking services “for a community that has coerced schoolaged children to work for them” wasn’t in the overall interests of justice. That a finding of child labour had been made was, in the bank’s view, a justification for invoking its contractual right to terminate the relationship.

Gloriavale took aim at the bank’s internal policies, telling the commission that customers were being separated based on desirability via “self-imposed and self-regulated” internal guidelines. These policies were effectively creating a new group of “socially unacceptable” customers who posed reputational risks for a bank – a segment that might then be used as a ground to exit undesirable banking relationships.

Unless customers brought proceedings, most wouldn’t have the opportunity to see the bank’s decision-making records – “which raises natural justice issues” – or challenge such a decision, Gloriavale said.

“Whether the role of moral arbiter is one that should be assumed by those providing a necessary service such as a bank is highly questionable, particularly when presently there is no legislative protection for persons excluded from banking services. This practice begs the question of ‘where the line is drawn’ for who may be permitted as a bank’s customer and who is excluded.”

Finding an alternative bank wasn’t easy, Gloriavale said, and it could become impossible if a customer was deemed undesirable. Justice Cull noted Gloriavale had been turned away from every bank, despite trying to make alternative

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banking arrangements.

Banking as a right?

A statutory right to having a basic bank account exists in the UK and Canada

Even where alternatives were not available, banks asserted an “unconstrained ability” to end their services for any reason, which could further isolate some communities and leave them more vulnerable in their reliance on everyday banking services, Gloriavale submitted.

A statutory right to having a basic bank account exists in the UK and Canada. But the lack of similar protection in New Zealand was concerning “if banks can make judgments, independent of contractual arrangements, as to who ‘deserves’ those services or who fits within the bank’s prevailing ideological stance”, it said.

“This risks increasing vulnerability for those who do not fit the perceived ‘acceptable’ customer [profile], those who participate in undesirable industries or whose values are not seen to be consistent with mainstream views. Competition is almost certainly effective for those customers who are ‘desirable’ customers – and equally likely to be ineffective for those who are ‘undesirable’.”

For the homeless, people with poor credit scores, those living in remote locations with spotty or no internet access or ex-offenders, their undesirability could leave them even more at risk of falling outside the banking net. The commission’s preliminary issues paper notes that financial institutions might not be properly incentivised to factor in the wider societal impacts of their actions.

“This is contrary to the principle of financial inclusion,” Gloriavale said. “There are inadequate checks and balances within the system to ensure that customers who no longer fit a bank’s ‘preferred’ customer profile (and may be contrary to it) have the ability to challenge that decision particularly where there are no practical alternatives for that customer.”

Rural isolation Rural Women New Zealand (RWNZ) spoke to some of the challenges that rural communities face. In its submission to the Commerce Commission, RWNZ said the closure of bank branches in rural areas could prevent such communities from accessing the personal banking services they needed, thereby forcing them to drive to their nearest branch – if they could afford to do so.

Similar to post offices, bank branches were a key piece of community fabric, especially in rural areas. Removing these facilities undermined the viability of small towns, RWNZ said.

“Consumers forced to travel out of town for banking services will take their purchasing power there, also potentially leading to the closure of local businesses.”

The advocacy group supported extending and expanding the regional banking hubs trial, an initiative being piloted in seven small towns throughout New Zealand and supported by 04

the New Zealand Banking Association and six of the country’s biggest banks: Kiwibank, BNZ, TSB, ANZ, ASB and Westpac.

Three new banking hubs were opened in mid-July as part of the pilot’s second phase, on top of the first four hubs that opened in late 2020. The trial will finish in mid-2024.

While the trials highlighted the continuing importance of accessing physical banking services, RWNZ said feedback to date suggested the hubs were yet to demonstrate they were a fit-for-purpose replacement. In visiting Whangamatā, one of the three newest hubs, and talking with locals about their experiences so far, Consumer NZ found an overwhelmingly positive reception to the initiative, although appointment hiccups had surfaced for customers wanting to see their bank’s representative.

For all its commendable potential benefits, digital connectivity remained an issue in many rural communities, said RWNZ, which agreed that innovations might disenfranchise banks’ rural customers.

“Internet and mobile coverage, reliability and capacity are not consistent across the country. These inconsistencies put New Zealanders in rural areas at a disadvantage, particularly where they limit (and potentially discourage) their participation. Moves to digitise personal banking services will need to take account of connectivity issues for rural consumers to ensure they are not excluded by these changes.”

Expanding and extending the regional banking hubs trials could give consumers a place to reliably connect with digital solutions, including video calls. However, the banking sector needed to recognise that rural consumers, the elderly and people living with disabilities might have trouble interacting across the digital divide.

Too technocratic The commission is four months into a 14-month-long study into whether competition for personal banking services is up to scratch. Excluded from the scope of the market study are corporate and institutional banking, commercial banking and business and agriculture.

The competition watchdog is seeking feedback on the nature of competition, its impact on people, barriers to entry and expansion, the ease with which account holders can search for and switch providers, the extent of innovation and the drivers behind local banks’ “persistently high profitability”.

However, the commission’s focus has been criticised for being too technocratic, to the exclusion “of the very consumers who are being disadvantaged by the Australian banks”. Wellbeing and social investment consultancy Habilis New Zealand raised several faults with the commission’s market study: from the “puzzling” communications shortfall to the regulator’s “invisible” work plan for economic or market analyses. But chief among the consultancy firm’s concerns was an absence of democracy in the commission’s process.

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Nov 10, 2023 Issue 40

Continued from page 04

Removing banking facilities undermines the viability of small towns

“The issues canvassed in the market study affect 99% of New Zealanders with a bank account and have far-reaching impacts on our entire economy. As the commission’s preliminary issues paper notes, there is prima facie evidence that the Australian banks are making excessive profits, well beyond any reasonably expected return on capital, which means billions of dollars are being siphoned out of the pockets of New Zealanders to provide the undue enrichment of predominantly offshore investors,” Habilis said.

“Given the wide-ranging social and economic impacts of this pernicious behaviour and the interplay with the regulatory failures that have led to it, the low-key approach of the commission makes little sense.”

‘Disempowering’ Only sophisticated market actors who were aware of the issues, understood the complexities and had the resources to participate in the study were considered stakeholders.

The technical nature of the issues paper was disadvantaging consumer engagement as it presupposed a level of knowledge.

Habilis also took aim at the commission’s “intent to exclude” consumer participation as demonstrated by its word choice.

“The very consumers whose pockets are being emptied and whose wellbeing is being negatively affected by the Australian banks are referred to exclusively in the third person.

For instance, the questions within the paper are framed as commentary on things that are happening to some theoretical group,” the consultancy firm said.

“The very language of the preliminary issues paper views the 99% of New Zealanders with a personal bank account as a passive group on whom banking market participants act with impunity. It is disempowering and exclusionary, and underlines the degree to which the commission is pursuing a technocratic process at the expense of the very people it should be representing.”

The bulk of submissions were from organisations and yet only two additional weeks were given to submitters wishing to

make cross-submissions “on hundreds of pages of technical documentation” – a remarkably short timeframe when compared to the 20-working-day timeframe the commission has to process an Official Information Act request. To assess, assimilate and then author responses “in half the time of an OIA request seems either deeply optimistic or intentionally exclusionary”, Habilis said.

A question of equity Addressing substantive points raised by the Australian banks was no small task and would take time, effort and expertise, the consultancy firm said, which would be “multiplied many times over throughout the 150-odd pages of smoke screens and water-muddying analysis from the Australian banks. Which brings us to the question of equity.”

Habilis expressed concern that the commission wouldn’t counter the Australian banks’ “specious” arguments, instead choosing to play the role of a neutral umpire, “merely adjudicating the competition between the Australian banks and their detractors” – the wrong position to take, in the consultancy firm’s view.

A significant resource imbalance existed between the banks and consumer advocates, which translated into a large power imbalance within the market study. Habilis said it lacked the budget to engage the country’s leading law firms or largest consultancies or specialised economists – so much so that the market study appeared to be “a game played by professionals against us amateurs”.

Consumer NZ, another small organisation compared to the Australian banks, was bigger in comparison to Habilis. “If Consumer NZ is struggling to engage with the commission’s technocratic processes and short timelines, then the hurdle is even higher for those of us with even more limited resource,” Habilis said. “While the commission did not set out to be discriminatory or exclusionary, that’s the place we find ourselves.”

Having received a second tranche of submissions, the commission is preparing its draft report for publication in March 2024. Its final report is slated for 20 August. ■

Engaging

with the Media Perspectives from the bench, bar, and press

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TRUST LAW

Five ways to make civil justice cheaper I think it can safely be concluded that the legal system we and other countries have inherited from England is largely unworkable for a majority of people

Anthony Grant

Anthony Grant

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In jurisdictions that have adopted the English system of law, there has been a huge increase of litigants in person. The main reason is obvious: most people can’t afford to pay the costs incurred with conventional common law litigation.

I was recently reading about litigants in Family Court proceedings in the fourth-largest trial court system in the USA. There, as many as 70% of all litigants in Family Court proceedings are said to act for themselves. And in Canada, figures from 2012 reveal that 40% to 57% of parties involved in family law cases were self-represented and in the five years following, it was estimated the proportion had increased to between 50% and 80% of all parties to civil/family actions.

I have heard anecdotally of similar statistics in Australia and New Zealand. I think it can safely be concluded that the legal system we and other countries have inherited from England is largely unworkable for a majority of people.

I have wondered whether part of the problem lies with the common law system we have inherited from England. There are two main legal systems in the world today. According to The Economist, the common law system is said to underpin the legal systems of 80 or so countries and the Code Napoléon from France and the civil law system in Germany are said to underpin the legal systems of about 150 countries.

Although I have no detailed knowledge of civil law systems, I have not read topical reports about the mass of citizens in the civil law countries being disenfranchised in family law litigation.

Some comparable jurisprudence about the effectiveness of the civil law regime for these disputes would obviously be helpful.

In the meantime, what should be done in our common law system?

The problem could be solved by taxpayers paying large sums in legal aid, but this would not be considered affordable.

Another solution would be mandatory mediations. This is being adopted in some places, but it is disadvantageous to many litigants in that it doesn’t enable them to be advised on the

strength or weakness of their case and on the best ways of achieving their desired objectives.

A third solution would be for Parliament to enact different forms of legislation that contains bright-lines which remove the need for lengthy evidentiary investigations. In this way, when oral disputes about contracts for the sale and purchase of land clogged the courts in England, Parliament enacted a brightline test that no such dispute would be entertained unless a contract for the sale of land was in writing. The rule would create unfairness for many people but it would also dispose of a large number of disputes without the need for litigation.

A fourth solution would be for the courts to be more aggressive in their adoption of procedures where judges have far more control over all aspects of civil litigation. We have been moving steadily down this path in recent years and it seems likely we will continue to do so.

A fifth action would require the courts to produce more information for litigants about the court system, including the support services that exist for litigants in person and the provision of information that explains the courts’ procedures.

In a major report on this topic in Australia in 2020, Litigants in person in the Family Court of Australia by Professor Dewar and two others, it was recommended that the courts should develop policies which set out clearly the courts’ approach to litigants in person, together with details of practices and procedures for assisting them. The authors said any such policy must deal explicitly with the balance to be struck between the provision of information on the one hand and the provision of legal assistance on the other.

The report said the state should take a proactive role in coordinating the provision of services by various agencies.

Such steps should “be regarded as necessary to ensure that all litigants, irrespective of means, would be given the meaningful opportunity to be heard” and that “principles of equality, fairness and legitimacy should prevail”. ■ Anthony Grant is an Auckland barrister and trustee, specialising in trusts and estates ■

Nov 10, 2023 Issue 40

TECHNOLOGY

Do you trust AI to write the news?

It already is – and not without issues There’s currently no comparison between the quality of news a journalist can produce and what AI can produce

Rob Nicholls Businesses are increasingly using artificial intelligence (AI) to generate media content, including news, to engage their customers. Now, we’re even seeing AI used for the “gamification” of news – that is, to create interactivity associated with news content.

For better or worse, AI is changing the nature of news media. And we’ll have to wise up if we want to protect the integrity of this institution.

Imagine you’re reading a tragic article about the death of a young sports coach at a prestigious Sydney school.

In a box to the right is a poll asking you to speculate about the cause of death. The poll is AIgenerated. It’s designed to keep you engaged with the story, as this will make you more likely to respond to advertisements provided by the poll’s operator.

This scenario isn’t hypothetical. It was played out in The Guardian’s recent reporting on the death of Lilie James.

Under a licensing agreement, Microsoft republished The Guardian’s story on its news app and website Microsoft Start. The poll was based on the content of the article and displayed alongside it, but The Guardian had no involvement or control over it.

If the article had been about an upcoming sports fixture, a poll on the likely outcome would have been harmless. Yet this example shows how problematic it can be when AI starts to mingle with news pages, a product traditionally curated by experts.

The incident led to reasonable anger. In a letter to Microsoft president Brad Smith, Guardian Media Group chief executive Anna Bateson said it was “an inappropriate use of genAI [generative AI]”, which caused “significant reputational damage” to The Guardian and the journalist who wrote the story.

Naturally, the poll was removed. But it raises the question: why did Microsoft let it happen in the first place?

Omitting common sense The first part of the answer is that supplementary news products such as polls and quizzes actually do engage readers, as research by the Center for Media Engagement at the University of Texas has found.

Given how cheap it is to use AI for this purpose, it seems likely news businesses (and businesses displaying others’ news) will continue to do so.

The second part of the answer is there was no human in the loop, or limited human involvement, in the Microsoft incident.

The major providers of large language models – the models that underpin various AI programs – have a financial and reputational incentive to make sure their programs don’t cause harm. Open AI with its GPT- models and DAll-E, Google with PaLM 2 (used in Bard), and Meta with its downloadable Llama 2 have all made significant efforts to ensure their models don’t generate harmful content.

They often do this through a process called “reinforcement learning”, where humans curate responses to questions that might lead to harm. But

There was no human in the loop, or limited human involvement, in the Microsoft incident this doesn’t always prevent the models from producing inappropriate content.

It’s likely Microsoft was relying on the low-harm aspects of its AI, rather than considering how to minimise harm that may arise through the actual use of the model. The latter requires common sense – a trait that can’t be programmed into large language models.

Generative AI is becoming accessible and affordable. This makes it attractive to commercial news businesses, which have been reeling from losses of revenue. As such, we’re now seeing AI “write” news stories, saving companies from having to pay journalist salaries.

In June, News Corp executive chair Michael Miller revealed the company had a small team that produced about 3,000 articles a week using AI. Essentially, the team of four ensures the content makes sense and doesn’t include “hallucinations” – false information made up by a model when it can’t predict a suitable response to an input.

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CASE NOTE

‘Nothing inherently dishonest’ in CBL fraud case, High Court finds Even if Mr Harris’ intention was for CBLI to arrange its affairs in a way that was most efficient in terms of calculating its solvency margin, I am not satisfied beyond reasonable doubt that in doing so he was acting fraudulently, that is, with knowledge he was acting in breach of his legal obligations

Reweti Kohere Crimes Act 1961 – Insurance (Prudential) Supervision Act 2010 – Reserve Bank of New Zealand – CBL Insurance – criminal fraud – beyond reasonable doubt – judge-alone trial – obtaining by deception – false accounting – theft in a special relationship

R v Harris & Mulholland [2023] NZHC 2635 per Robinson J CBL Insurance (CBLI) was one of the larger insurance companies in New Zealand at the time of its collapse in November 2018.

Incorporated in New Zealand in the early 1970s, CBLI started providing insurance cover for builders’ warranties but by the time of its lilquidation, only a sliver of its business (1%) was based locally. Its parent was CBL Corporation (CBL Corp), a listed company on the New Zealand and Australian stock exchanges.

When share trading was halted in early 2018, CBL Corp was worth almost $750 million.

Much of CBLI’s overseas business was promoted by two managing general agents, who worked with brokers to source and write insurance business and acted on behalf of “ceding” insurers, which give up a portion or all the insurance risk to another insurer. Of its overseas business, CBLI reinsured three European cedant insurers of the French construction industry: the 08

Gibraltar-domiciled Elite Insurance, Alpha Insurance (domiciled in Denmark), and Ireland’s CBL Insurance Europe DAC. In 2017, European regulators started investigating the reserving levels of CBL Corp’s ceding insurers and an investigation began in New Zealand.

Given its New Zealand operations, CBLI was a licensed insurer and subject to the oversight of the Reserve Bank of New Zealand (RBNZ), the “home country” regulator and prudential supervisor of the insurance sector. Under the Insurance (Prudential) Supervision Act 2010, CBLI had to comply with prudential solvency standards and hold sufficient reserves of capital to absorb losses before policyholders were affected. Concerned about imprudent management and breach of regulatory directions, New Zealand’s central bank applied in February 2018 to put CBLI into interim liquidation. Full liquidation followed in November 2018. CBL Corp collapsed in May 2019.

At the time, Peter Alan Harris was CBLI chief executive and managing director while Carden James Mulholland served as chief financial officer. Following an investigation by the Serious Fraud Office (SFO), the pair were charged with fraud under the Crimes Act 1961.

Specifically, Harris faced five counts of theft by a person in a special relationship, two counts of obtaining by deception and one count of false accounting (charges one to eight). Mulholland was charged as a secondary party to one count of theft by special relationship (charge two), and as a co-defendant on one count of obtaining by deception and one count of false accounting (charges seven and eight).

The eight charges could be split into two broad groups: charges one to five alleged theft in special relationship (Crimes Act, s 220), relating to five statutory directions the RBNZ issued to CBLI and CBL Corp under the IPSA. Charges six to eight alleged obtaining by deception (ss 240 and 242 of the Crimes Act) and false accounting (s 260 of the Crimes Act). These charges concerned a payment known as the “Samoa transaction”.

On 15 October 2015, CBLI deposited €12.5 million with the

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Nov 10, 2023 Issue 40

Continued from page 12 National Bank of Samoa (NBoS). On the same day, the bank lent the sum to Federal Pacific Group (Singapore) (FPGS). Also on the same day, FPGS lent the money to Alpha (which CBLI had reinsured). CBLI, together with former CBLI director Alistair Hutchison, personally guaranteed the arrangement.

In early 2020, Harris and Mulholland pleaded not guilty to the SFO’s case, which was due for trial in September 2021. However, it was rescheduled to April 2023 after Hutchison, who was facing a separate trial on one count of obtaining by deception, died.

After a nearly two-month trial, Justice Michael Robinson found Harris and Mulholland not guilty on all charges. The SFO has since sought leave to appeal two of those not-guilty verdicts.

The pair (and Hutchison’s estate) also face charges under the Financial Markets Conduct Act 2013. Set for trial in April 2024, the case relates to documentation supporting CBL Corp’s initial public offer in 2015.

The RBNZ is empowered, by s 55, to issue solvency standards.

Among other things, these may prescribe the minimum amount of capital a licensed insurer must hold and maintain, the methods for determining a solvency margin and its maintenance, and the methods for valuing an insurer’s assets or liabilities.

An insurer’s solvency margin is the difference between its actual and minimum solvency capital. Often expressed as a solvency ratio, the margin is calculated by dividing the actual solvency capital by the minimum quantity. Calculations made under solvency standards essentially categorise an insurer’s assets and apply a risk charge to their absolute value. The more easily or reliably an asset might become available to pay claims, the lower the risk charge would be. Unencumbered cash, for example, had a realisability risk of 0.5% while amounts loaned to an insurer’s directors or subject to change had a risk of 100%.

CBLI’s licence conditions required it maintain a solvency margin of $0, or a solvency ratio of 100%. In other words, CBLI had to maintain realisable assets of twice the amount determined as the level of solvency under the relevant solvency standard. This margin was later increased to 170% as per an RBNZ direction.

Regulatory framework Enacted in 2010, the IPSA comprehensively outlines a framework for the prudential regulation and supervision of New Zealand insurance companies. They must be licensed and comply with the terms of their licences and with the Act. As part of its supervision function, the RBNZ may require a licensed insurer to supply information about any matters relating to its business, operation or management – including in times of distress. In such circumstances, the central bank may request an investigation into the insurer’s affairs, direct the company to prepare a recovery plan and, in certain situations, restrict its actions. The RBNZ must meet the following criteria, under pt 4, subpt 2 of the IPSA, to make a valid written direction: ■ the central bank must believe one of the paragraphs in s 143(1) applies; ■ the bank has reasonable grounds to believe so; ■ the direction states the grounds upon which it is being given; and ■ the substance of the direction falls within the prescribed scope in s 144, which sets out the ways in which a licensed insurer may be required to act or not act. The direction must not prevent renewals of insurance contracts originally entered into before the direction was given.

The Samoa transaction – charge six The Crown argued the €12.5m deposited in the Samoa transaction constituted collateral for the NBoS/FPGS loan. As such, a risk charge of 100% should have applied. However, due to Harris and Mulholland’s deceptive omission, the deposit was treated as a cash deposit, with a risk charge of 15% and then 0.5%. Had the correct risk charge, based on the circular character of the actual transactions, been applied to the term deposit, CBLI’s solvency margin would’ve fallen under the 100% requirement as a condition of its licence.

On the sixth charge of obtaining benefit by deception, the Crown had to prove beyond reasonable doubt that Harris directly or indirectly obtained the €12.5m that FPGS paid to Alpha, and that Harris used a fraudulent stratagem to obtain the benefit, in the knowledge he was acting dishonestly.

The court wasn’t convinced. Willing commercial parties lawfully entered into the transactions, which were fully documented by NBoS’ solicitors, the judge held. “There was nothing inherently dishonest about the transactions. The

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documents were intended to take effect according to their terms.

There is no suggestion they were a sham,” said Robinson J, who also doubted the 100% risk charge. Evidence suggested the risk rating might have been 40%, while CBLI’s appointed actuaries testified the appropriate charge, in their mind, was 15%.

“Even if Mr Harris’ intention was for CBLI to arrange its affairs in a way that was most efficient in terms of calculating its solvency margin, I am not satisfied beyond reasonable doubt that in doing so he was acting fraudulently, that is, with knowledge he was acting in breach of his legal obligations.” Charge six was dismissed on this basis, although the judge found, obiter, that he wasn’t sure Harris used the alleged strategy to intentionally deceive the RBNZ or that Harris believed the transactions were unlawful. The judge didn’t address whether the stratagem was a material cause of a benefit being obtained.

Charge seven The co-defendants were alleged to have deceptively omitted to disclose that the term deposit and the surety bond were loan collateral. The benefit they were said to have obtained was the ability for CBLI to claim a lower risk charge under the solvency standard.

Robinson J wasn’t satisfied, though. The form of undertaking gave NBoS contractual rights against CBLI, including requiring the insurance company to pay any part of the amount owing to it by FPGS if it defaulted on the €12.5m loan. However, the surety bond – described by Robinson J as “something of a generic boiler-plate clause” – made no reference to security over the term deposit or set-off rights against it. “The contractual documentation does not appear to give NBoS a security interest in (or charge over) the deposit, or any set-off rights against it.

This appears to be by design. Contractual provisions that might have provided NBoS with such rights were removed by NBoS’s solicitors during the drafting process,” the judge said. Harris and Mulholland were found not guilty.

Charge eight The pair were charged with false accounting under s 260(b) of the Crimes Act. With an intent to deceive, the men were alleged to have left out of the 2014 CBLI annual report that the term deposit and surety bond were loan collateral. For similar reasons as under charge seven, the judge wasn’t satisfied beyond reasonable doubt the eighth charge was made out.

“The evidence also left me unsure as to whether (and if so, how) deposits would have been reported differently in the CBLI Group Annual Report if it was collateral for the NBoS/FPGS loan, as alleged,” Robinson J said. “For these reasons, I find both Mr Harris and Mr Mulholland not guilty of charge 8.”

allegedly breached, was lawful.

Breaching IPSA directions is a criminal offence, of which officers or employees of a licensed insurer can be jailed for up to three months, be fined up to $200,000, or both. However, the SFO charged Harris (and Mulholland) with theft in a special relationship under s 220 of the Crimes Act, for which seven years’ imprisonment is the maximum penalty.

Section 220 requires the Crown to prove, beyond reasonable doubt, the accused has control of property and holds it in circumstances that required they deal with it or any resultant proceeds in accordance with the requirements of another person.

Moreover, the accused know about these circumstances and still intentionally deals with the property or resultant proceeds in breach of them (as per R v Douglas [2012] NZHC 1746).

A preliminary question for Robinson J was whether s 143 directions were “requirements” under s 220. Harris argued, as a “complete answer” to the RBNZ directions charges, that non-compliance with a direction affecting CBLI’s property couldn’t amount to theft. He reasoned the RBNZ didn’t have any contractual or other rights over CBLI’s property and the regulator and the company weren’t in a special relationship. The Crown argued the directions were “requirements”, arising from the RBNZ’s statutory power to impose directions and conditions on an insurer’s licence.

The judge accepted the Crown’s position. CBLI couldn’t carry on business without a licence from the RBNZ; it would otherwise have been an offence to do so and could result in the licence being cancelled. While the IPSA didn’t explicitly insert obligations into CBLI’s contracts of insurance with policyholders or cedants, the obligation to comply with a s 143 direction was essential to the contracts from which CBLI received its funds, Robinson J said.

“This is not to say that all s 143 directions will be ‘requirements’ for the purposes of s 220. Whether any particular s 143 direction amounts to a s 220 requirement will depend on the precise terms of the direction and the reasons for which it was imposed.”

Charges four and five Starting with the earliest direction, issued on 25 June 2017, the High Court analysed charges four and five. The RBNZ’s first direction was issued on the basis that CBLI might be doing business imprudently and required the company to refrain from taking steps that would see it increase its insurance risk. Charges four and five concerned actions CBLI took after RBNZ issued the directions, in which it executed changes to agreements that were, however, entered into before the directions were issued.

Justice Robinson had little difficulty finding CBLI’s CEO and managing director had control over the money used in the actions that the Crown alleged constituted the offence. But that control had to be subject to RBNZ requirements under the IPSA. This question depended on whether the direction was validly issued.

Evidence suggested the RBNZ was concerned CBLI might

RBNZ directions – charge one On the first five charges, the court found not one of the directions the RBNZ issued to CBLI, and on which the insurer 10

Continued on page 11

Nov 10, 2023 Issue 40

Continued from page 10

have been “under-reserved” but was seeking to increase its insurance risk in purchasing the remaining Elite shares it didn’t already own. Meetings between CBLI and RBNZ officers occurred at the same time as McGrathNicol started investigating CBLI’s position at the central bank’s request. Until this investigation was completed, RBNZ officers maintained a “holding pattern”.

Harris argued the RBNZ lacked reasonable cause to believe CBLI was being managed imprudently. If the bank needed the investigation to confirm or dispel what was, at the time, only a suspicion, it couldn’t have held reasonable cause to believe. The judge agreed – that CBLI “may not be carrying on its business” prudently was a conclusion amounting to suspicion, insufficient to empower the RBNZ to issue the first direction. “Suspicion and belief may all be degrees of certainty, but they are different degrees of certainty,” Robinson J said. “In the context of IPSA the difference between suspicion and belief is substantive and important.” As the issue of the first direction was invalid, charges four and five fell away.

In obiter comments, Justice Robinson concluded the proposed purchase of the last 20% of Elite, which set off the RBNZ concern, wasn’t evidence of CBLI’s imprudence. And, had the first direction been lawful, CBLI’s taking on of more risk in providing additional financial support would have been contrary to the first direction. However, the transaction would’ve fallen under the ordinary-course-of-business exception.

Charges two and three Issued on 22 November 2017, the second direction required CBLI to consult with the RBNZ before entering into contracts involving payments or transfers of assets exceeding NZ$5m. A third direction, issued on 29 January 2018, defined “consult” as CBLI giving the central bank enough information to inform its decision on the proposed transaction, receiving the bank’s feedback and taking it into account before entering the transaction.

Harris was alleged to have authorised collateral payments totalling NZ$13.2 to American insurance company United Specialty. In so doing, he intentionally dealt with CBLI’s funds contrary to the requirement to consult. Mulholland was alleged to have intentionally helped his CEO make the payments constituting charge two.

Harris made the same “suspicion, not belief” argument, as well as arguing a requirement to consult wasn’t a s 220 “requirement”.

He succeeded with both arguments – in particular, the requirement to consult was essentially procedural in nature, the judge held, rather than a requirement that CBLI deal or not deal with its property in a specific way. As Harris was found not guilty on charge two, Mulholland was found not guilty.

Charge one Harris allegedly authorised a €25m payment from CBLI to Alpha, an intentional dealing of the insurer’s funds in breach of the RBNZ’s fourth direction of 12 February 2018. The day before,

CBLI informed the central bank it had agreed to reduce its reinsurance exposure to the Danish cedant insurer by making a €25m payment in consideration of a credit reduction of €27m of current and future reinsurance claims.

CBLI’s view was that the payment fell within its ordinary course of business. Nevertheless, CBLI wanted to discuss the matter with the central bank before any payment was made. The fourth direction forbade CBLI from making the payment and any other transactions worth NZ$1m without the bank’s prior written permission.

Justice Robinson was satisfied beyond reasonable doubt that Harris intentionally dealt with CBLI’s funds in a way that he knew would breach the fourth direction. However, the judge said that not following the direction wasn’t a theft under the Crimes Act. The direction effectively prohibited CBLI from performing its otherwise lawful and contractual obligations. Even if it were valid, “it is difficult to imagine that when s 220 was enacted in 2003 that Parliament would have intended that the performance of otherwise lawful contractual obligations to third parties should be theft”.

Crucially, the direction was rendered invalid because it didn’t state the grounds upon which it was given – that the RBNZ believed either solvency margins or prudent business were at play. Instead, the bank’s stated concern about equitable treatment between policyholders and creditors – for which RBNZ argued was a plain reference to CBLI’s solvency – was about potential outcomes in the event CBLI collapsed. At the time, liquidation was merely hypothetical; no decision had been made to liquidate. And the bank’s independent investigation hadn’t been completed.

“I am not satisfied that a s 143 direction can amount to a ‘requirement’ for the purposes of s 220 in circumstances where the RBNZ has not strictly complied with the mandatory statutory requirements placed upon it.”

Applicable principles: Crimes Act 1961 – Insurance (Prudential) Supervision Act 2010 – theft by person in special relationship – whether Harris (H) had control over property in circumstances that required he deal with it in accordance with the requirements of the RBNZ – whether H knew of the requirement to deal with the property in accordance with the RBNZ directions and dealt with the property otherwise than in accordance with the directions – obtaining by deception – whether H obtained a pecuniary advantage directly or indirectly – whether H engaged in a fraudulent stratagem with the intent to deceive. Whether the stratagem was a material cause of H obtaining a benefit.

Whether H believed that engaging in the stratagem was not lawful – whether H and Mulholland (M) omitted to disclose material where they were obliged to do so – whether H and M’s omission was with the intention to deceive – whether benefit was obtained by that deception – false accounting – whether H and M omitted any material particular from any book or account or other documents with the intent to obtain a benefit by deceit Held: Harris was found not guilty on all eight counts; Mulholland not guilty on three charges. ■ Click here to read the case ■ 11

COMMITTEES

Meet Joanna Pidgeon, convenor of the Documents and Precedents committee I think it’s easier for a membership organisation to advocate if it doesn’t have the complications of being the regulator Brenda Newth Where do you work, what’s your role?

I’m a director of Pidgeon Judd, which is a boutique property and commercial law firm based in central Auckland with a branch in Wanaka.

Where did you study?

I did a LLB (Hons) at the University of Auckland. I had always wanted to be a lawyer and wanted to get through university as quickly as I could. My dad, Colin Pidgeon QC, was a past president of ADLS (now known as The Law Association).

What’s been your career to date?

Joanna Pidgeon

12

I summer-clerked at Simpson Grierson in Wellington.

Originally, I wanted to be a litigator (I had done speech and drama through school and university).

But dad said if I wanted to litigate, some transactional experience was advisable – that if I wanted to litigate a property deal, I should actually settle one. He suggested I work in general practice, doing a bit of litigation.

Initially I worked with Peter Newfield for three years.

Then Simpson Grierson approached me to come back and work for them on their commercial property team. At that stage I had to decide whether I wanted to pursue my goal of being a litigator or focus on property. And when I reflected, I really liked building relationships with people and helping them achieve things. Litigation doesn’t really enable you to do that.

So, I made the switch to focus on property.

I was with Simpson Grierson for five years, then I went to Hesketh Henry and was a partner there. And then, when my second daughter was quite young, I made the decision to start my own firm. Two years

ago Pidgeon Law merged with Lee Judd Law to form Pidgeon Judd.

My husband Philip Hardiman is practice manager for the firm. The secret to making it work is to keep work- and family-talk separate. Philip also participates on The Law Association’s AML committee.

How long have you been involved with The Law Association committees and which committees have you worked with?

I worked for ADLS part-time in the computer bureau during my last year of uni. That was when I first got involved with the organisation. I have done committee work for about 20 years. I was on the Documents and Precedents committee about 20 years ago. I became involved in and chaired the Property Disputes committee and I’ve been on the Property Law committee for most of that time. I was on the AML committee for a time and rejoined the Documents and Precedents committee about a year ago. I’m still a member of the Property Law committee.

Why is committee work important?

I enjoy committee work. From my perspective, it’s important for three reasons: ■ Collegiality. I’ve made some good friends and contacts through being on committees. These days you’re settling property transactions via email, which is so different from when I started, when you’d have personal settlements and you’d meet people.

■ Committees are a good way of keeping on top of legal issues in your practice area.

Continued on page 13

Nov 10, 2023 Issue 40

Continued from page 12 ■ If you think there’s something wrong or something needs to be changed or improved, being on a committee gives you a bit of a platform to do it and you can get the backing of The Law Association. It gives you a platform for advocacy to make changes in legislation or changes of approach or if you’re trying to make things better for the public or legal practitioners, so I quite enjoy that aspect as well.

How do The Law Association committees make a difference?

You can make a difference to practitioners by addressing problems or things clients are struggling with or things you observe out there in the community. You can improve forms or give people new tools to do things.

One of the biggest impacts I have made was with [DLA Piper partner] Justin March with the 2012 version of the Deed of Lease, after the Canterbury earthquakes. We came up with the concept of the “no access” clause in cases of emergency. Usually there is a rental rebate where you have damaged buildings where you cannot enter. But we had the red zone – a situation where there might be nothing wrong with a particular building but because it was cordoned off, you couldn’t use it.

We felt that needed to be addressed. We ended up including pandemics and epidemics in our definition in the clause. And who would have thought that something like covid would happen? And that we’d have nationwide lockdowns? This clause provided a mechanism for creating a fair outcome between landlords and tenants. It was amazing to see the concept we had come up with providing real assistance to a whole lot of businesses which were struggling during the covid lockdowns.

How do you see the role of a committee convenor? What specific skills do you think a convenor needs?

The role of the convener is to chair the meetings.

You’re there to help set the goals, working with and consulting with your members, seeking and getting feedback and ensuring participation and input from people. You’re not imposing what you think should happen but working with everyone towards common goals.

You need to be on top of developments and things that are happening and relevant to your area of law.

You need to make sure there is a broad range of interests and skills on the committee. And if we don’t have a particular skill on the committee, we can form subcommittees and commandeer people when help is required. So, you need to have a good network to get the best outcomes, particularly in documents and precedents.

What is your biggest frustration as a convenor?

How time-pressured we all are and remembering that people are busy and doing this voluntarily. So, it is keeping things on track and done in a timely manner as people deal with their work and family pressures.

That’s probably the hardest thing. And we’re so appreciative of what people do contribute.

What’s been the most notable achievement or biggest focus of your committee during the past few years?

Why was that important?

The covid clause was quite a big achievement in terms of having far-reaching impact. For the Documents and Precedents committee, a lot of what we deal with is keeping forms up-to-date, with constant change in AML and other legislation such as tax and even the Matariki holiday. All those things have a ripple effect on our forms. And even things like covid clauses – for example, do we recommend it as a temporary additional clause? Or do we set it in stone in the agreement? We always face these changes and need to assess whether they are short-term or have longer-term impacts that need to be dealt with.

Keeping everything up-to-date and relevant has been a real achievement.

Over the past year, has your committee made submissions on a parliamentary bill or any consultation paper?

I am a member of the Documents and Precedents and the Property Law committees. Members of our committees submit on a number of things – the Incorporated Societies Act, for example. One of the bigger things we were part of was the Unit Titles Working Group, which led to the passing of the recent amendments to the Unit Titles Act. The amendment improved disclosure and governance for bodies corporate.

We were involved right from the beginning as one of the parties, writing research papers, meeting with Nick Smith (the then Minister of Housing) and lobbying both sides of the aisle to commit to change.

After the election, and because it was not a high

priority, we ended up working with Nikki Kaye and drafted a bill with the other members of the group. It got drawn out of the ballot and led to the passing of the legislation. So being part of a particular piece of law, rather than just submitting, was quite exciting.

What would you say to anyone thinking of becoming involved in a Law Association committee?

Just do it. When you start off, it might be just observing, participating as you can and finding your feet. We’re not expecting you to lead the drafting of submissions in your first week! You get to meet and engage, have your opinions heard and be at the forefront of developments and changes. And if you have a particular interest or expertise, you can use it to make a positive impact.

What’s the biggest issue facing your practice area? And how does that affect lawyers and their clients?

The state of the property market impacts people – for example, the issues around sunset clauses. When the market is high, developers use sunset clauses to try to tip purchasers out of agreements so they can re-sell the property at a higher price. Now that the market is softer, interest rates are high and values have dropped, vendors are trying to keep purchasers in, despite construction delays.

We are waiting for the final makeup of the government as a few things are likely to change such as the bright-line test, the Residential Tenancies Act and depreciation. All those things affect the property sector and can require changes to documents. We need to be ready to deal with them and make sure everything is current and our members are updated on developments.

We’re also thinking about things we might be able to add to our suite of documents that might help lawyers in running their practices better.

I think it’s hard to work as a lawyer, with multiple deadlines. High standards are expected. Lots of demands on time, compliance, just everything.

What’s the best-kept secret about The Law Association?

The breadth and numbers of different committees and the skill bases within them. What I’ve seen lately is our committees collaborating more with one another.

This happened with the recent changes to resource

Continued on page 21 13

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WEBFORMS

Enduring power of attorney: answers to some commonly asked questions If you do modify the form, the risk is that you leave out something that is not optional

Peter Orpin This article is not a guidance note for practitioners about how to establish an enduring power of attorney (EPOA) for a client, nor does it provide academic insight into the finer points of the relevant law.

It is instead intended to be a down-to-earth question-and-answer approach to practical matters associated with an EPOA and its preparation.

Statutory references are to the Contract and Commercial Law Act 2017 (CCL Act) and the Protection of Personal and Property Rights Act 1988 (PPPR Act), unless the context suggests otherwise.

Executive summary As a matter of good practice, we recommend that each EPOA (whether for property, or for personal care and welfare): ■ must be marked in some way by the donor, whether with a wet signature or a permanent mark of some description (electronic signatures are prohibited); ■ must be witnessed by an independent person who can identify the donor and who was present when the donor affixed their mark or signature; ■ need not be initialled on each page; ■ should not be signed in counterpart; and ■ should be kept: (i) as an original signed instrument by the donor’s solicitor; and (ii) as a certified copy, in soft and hard form, by the attorney.

Signatures on an EPOA instrument ■ Can the donor sign with an electronic signature? No. Signing an EPOA with an electronic signature is expressly prohibited (Part 3 of Schedule 5 to the CCL Act).

■ What if the EPOA has not been signed by the donor and/or the attorney(s)? Not acceptable. For an EPOA to be valid it must be signed by the donor and each attorney, each of whose signature must be witnessed by a qualifying witness (section 94A of the PPPR Act). Under current law, the Court has no authority to declare an unsigned, or incorrectly signed, EPOA instrument to be valid.

16

■ Who is a qualifying witness? For the donor’s signature, a qualifying witness is a person independent of the donor who is: ■ a lawyer; ■ an officer or employee of an authorised trustee corporation; or ■ a qualifying legal executive.

■ For an attorney’s signature, the witness can be anyone except the person who witnessed the donor’s signature. We take the view that the legal capacity of any witness is implied, so (in addition to any specific qualities) a witness should be a person who is: ■ 18 years of age or older; ■ not subject to a property or other order under the PPPR Act; and ■ otherwise a person who has the capacity to understand what they are doing.

■ What if one or more signatories to an EPOA have not had their signatures witnessed? Not acceptable, for the same reason as in the second question above.

■ What if the donor’s (or attorney’s) signature is not legible and/or is inconsistent with the donor’s (or attorney’s) known signature?

Acceptable. A signature is a mark made on a document by an individual to confirm they agree with the terms and accept any conditions described in the document. The PPPR Act does not require a legible and/or complete signature, neither does it require a mark or signature to be in a certain form.

The signature or mark should adequately identify the signatory and adequately identify the signatory’s approval of the information to which the signature relates (this is an adaptation of section 226 of the CCL Act). If, however, the signature or mark is inconsistent with a known signature or mark, care must be taken to ensure the identity of the donor. Good practice would be for the practitioner to prepare a file note to identify any reason(s) for the inconsistency (the signatory may have recently suffered a stroke, for example).

■ What if a witness’s signature is not legible and/or consistent with the witness’s known signature? Acceptable. We do not believe

Continued on page 17

Nov 10, 2023 Issue 40

Continued from page 16 that this (of itself) would call the validity of an EPOA into question.

The role of a witness is to acknowledge that s/he verified the identity of the donor and was present when the donor signed or marked the EPOA (another adaptation of the CCL Act, this time section 227). The PPPR Act goes a step further in section 94A(4) by requiring a witness to be independent of the donor or each attorney (as the case may be).

There is no statutory or other legal requirement that a witness’s signature be legible or consistent with his or her previous known signatures. It is, however, important to know who the witness is in case the validity of the EPOA is ever called into question, and this is usually achieved by legibly printing a witness’s name close to the signature.

■ Must every page be initialled for the EPOA to be valid? No. This proposition appears to have developed from practice rather than for legal reasons. The requirement for parties to initial each page of a document is typically limited to certain bank and court documents. The PPPR Act does not require this, and it is not considered in any of the literature we consulted about electronic and/or digital signing. We see no reason to recommend that each page of an EPOA instrument be initialled.

In our view, a document where pages have not been initialled is no less secure or “legally binding” than a document where every page has been initialled. Perhaps the most compelling reason to insist that each page be initialled is reduction of the risk of an unauthorised page swap. The assessment of such risks rests with the practitioner and will depend on the particular circumstances.

The argument that an initial is proof the signatory has read the relevant page is (in our view) weak, given that initialled pages are not required for the terms of the document as a whole to be enforceable.

Who should keep an original signed copy of an EPOA? ■ The donor? No. There is little point in the donor retaining the original signed copy of the EPOA. The completed EPOA is evidence that the appointed attorney has the donor’s consent to make a decision for the donor when the donor is unable to make a decision for him/herself. If the donor is incapacitated, and the completed EPOA instrument cannot be located, it might as well not exist.

■ The attorney? Generally, no, unless there is a good reason for the attorney to hold the original. We would typically expect an attorney to hold a certified copy of the instrument and to know who to approach for additional certified copies, if required.

■ What if there are attorneys who may or must act jointly? In practice, we would expect only one attorney to hold a certified copy of the EPOA instrument on behalf of all joint attorneys. If the named attorneys have the ability to act severally, however, each attorney should hold a certified copy. We generally don’t support the view that an original instrument be held by one of

joint attorneys unless there is a good reason to do so. In that case, the attorneys should agree between themselves who the holder should be.

■ The donor’s solicitor? We consider it is best practice for the donor’s solicitor to hold the original EPOA instrument unless a good reason exists for the donor’s solicitor to hold only a certified copy. If an attorney needs a further certified copy of the instrument, it should be available on demand and without issue from the donor’s solicitor’s office. Where the donor’s solicitor holds the original and a request is made for a certified copy, the donor’s solicitor is likely to be best placed to know whether circumstances have changed such that the EPOA is no longer current or is perhaps invalid for other reasons.

One of the changes we are considering making to The Law Association standard form EPOA document is to clearly identify the donor’s solicitor (or the firm of solicitors). Where the donor’s solicitor holds the original instrument, this should make it easier to obtain certified copies in the future.

■ The attorney’s solicitor? Generally, no, although there may be sense in the attorney’s solicitor holding a certified copy as an additional backup. The attorney’s solicitor is unlikely to have the same level of knowledge as the donor’s solicitor about the status of the EPOA at the time a certified copy is requested by the attorney. For that reason, we prefer the view that the donor’s solicitor is better placed to hold the original instrument.

■ An independent person? No. We see no reason for a person outside the donor/attorney relationship to hold the original EPOA instrument. The involvement of another person also increases the risk of a breach of privacy or confidentiality.

Should an EPOA instrument be held in paper form?

■ The logistics and cost of long-term storage, while retaining the ability to readily access signed documents, can present difficulties to practitioners. Increasingly, copies of signed documents are held on electronic storage media rather than in hard-copy paper form, but it is a matter of personal preference.

■ A document is not denied legal effect solely because it exists in electronic form (see ss 211 and 219 of the CCL Act). However, s 220 of the CCL Act limits this where the provision of a document in electronic form requires the consent of the person to whom it is provided. In other words, if the person to whom a copy of a completed EPOA instrument is offered says that s/he will accept only a copy that is made from an original in hard copy, the electronic form is not legally valid for that transaction. The risk of this happening may, of itself, be reason to hold a signed and witnessed EPOA instrument in paper form.

■ Good practice may be for a practitioner and/or the attorney to retain both a paper copy and a soft copy. We suggest the soft copy should be a scanned copy of the signed and certified copy, not a soft copy of the unsigned document.

Continued on page 18 17

Continued from page 17

Can an EPOA be signed in counterpart?

■ For most purposes, no. An exception might be akin to the practices adopted during the covid-19 lockdowns, as described in regulation at the time, when personal proximity was not possible.

Most (if not all) of these “emergency measures” were temporary and have now been relegated to history. It is at least arguable that an attorney may want to take advantage of an ability to sign in counterpart – a parent donor who appoints an out-of-town or offshore adult child as an attorney, perhaps. Although not expressly prohibited, an entity that needs to rely on an attorney’s signature might refuse to accept an EPOA signed in counterpart, even though the entity can rely on the certificate of nonrevocation. A practitioner should advise on the risks associated with signing counterparts as there may be occasions when this is the only practical option.

■ The better approach, in our view, is to avoid signing an EPOA instrument in counterpart. This reduces the risk that, at some time in the future, an entity seeking to rely on the EPOA instrument will say it is in unacceptable form.

The format of the EPOA available from The Law Association WebForms ■ Why does The Law Association form have so many pages? The Law Association form is presented as a standalone document.

A user does not need access to any statutes or to a legal textbook to understand how an EPOA is established. The Law Association form includes general notes about completing the form and having it correctly witnessed, an explanation of the effects and implications of an EPOA, and a glossary explaining most legal terms used in the document. Attached to The Law Association form is an additional copy of the explanation and of the glossary.

It is suggested that the additional copy of the explanation and the glossary be provided to the donor and each attorney named in the instrument.

■ Why does The Law Association form include so many questions?

Again, The Law Association form is standalone. It covers each of

the statutory options available to a donor that need to be considered each time an EPOA is established. It is an “all things to all people” document, which does make it lengthy. Not all donors will want to take advantage of all the options. But for those who do, the options are there. A standard form that kept only to the basics would not alert donors to the choices permitted by the statute.

■ What about the clauses I don’t want to use? If I omit or strike out clauses, will this invalidate an otherwise correctly signed and witnessed EPOA? Many of the clauses deal with options available to the donor. If the donor does not wish to take advantage of an available option, the deletion or modification of that clause will not necessarily invalidate the EPOA instrument (the right to specify what gifts or donations an attorney may make, for example, is not an option that every donor may wish to exercise). Indeed, some questions in The Law Association standard form require you to strike out the responses you don’t want.

If you do modify the form, the risk is that you leave out something that is not optional. This may jeopardise the integrity of the EPOA and invalidate the entire document. If in doubt, we recommend using the form as written and marking the options that are not adopted. Using the form as written also has the advantage that it forces the practitioner to take the donor through each option which is required for certification purposes.

As best practice, therefore, we recommend that all clauses in The Law Association standard form EPOA be left as is or struck out (where that is a marked option), but otherwise be left unmodified.

Could The Law Association standard form EPOA be reviewed with the intention to making it easier to follow?

The Law Association Documents and Precedents Committee has a program to regularly review the precedents it makes available to practitioners. If you have any ideas for improvements to the standard form EPOA instruments, please forward them to the Documents and Precedents Committee at PO Box 58 Shortland Street, Auckland 1140, or by email to jenna.tau@thelawassociation.nz. ■ Peter Orpin is a special counsel at Lane Neave and a member of The Law Association’s Documents and Precedents Committee ■

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Grab a friend or colleague and set up on your own with a real growth opportunity on offer. Have a crack with some real experience to help you on your way.

Reply in confidence to: advertiser@thelawassociation.nz, quoting ref: NS1023

The Law Association Inc.

PO Box 58, Shortland Street, DX CP24001, Auckland 1140 Ph: (09) 303 5270

BEATTIE Nelwyn also spelled as Nellwyn • Late of 430 Rahuikiri Road, RD2, Wellsford, 0972 • De facto • Mother • Aged 53 / Died 09’09’23 BURKE Hubert • Late of 37 North Road, Kawakawa • Aged 90 / Died 01’11’23

SOLICITORS OFFICES FOR SALE LOVE Wendy Sharree • Late of 52 Kohekohe Street, New Lynn, Auckland • Aged 59 / Died 28’10’23 PLANT George Raymond • Late of 105b Princes Street, Pukekohe • Aged 93 / Died 13’08’23

South Auckland, Manurewa

Growing and productive area with great potential and not overly serviced. (Possibly selling the business as well which is longestablished – open to negotiations. Phone: Martin (09) 268 8067) Great accessibility and visibility with client parking. Very suitable for smaller operation. Live in separate minor home and income.

For Auction: Wednesday 15 November 2023 See Barfoot & Thompson website. I.D: 855654 Trade Me property I.D: 4374657385

Advertise your business Get your message in front of our readers comprised of nearly 6,000 lawyers, judges, politicians, and academics.

Contact our account manager Darrell Denney M 021 936 858 E darrell.denney@thelawassociation.nz

Excellence in Legal Writing (Hamilton Workshop)

Tuesday 14 November 2023 | 9.00am – 12.15pm 3.00 CPD hours | In-person workshop

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Nov 10, 2023 Issue 40

Continued from page 07

While this news is likely to be accurate, the same tools can be used to generate potentially misleading content parading as news and nearly indistinguishable from articles written by professional journalists.

Since April, a NewsGuard investigation has found hundreds of websites, written in several languages, that are mostly or entirely generated by AI to mimic real news sites. Some of these included harmful misinformation, such as the claim that US President Joe Biden had died.

It’s thought the sites, which were teeming with ads, were likely generated to get ad revenue.

Generally, many large language models have been limited by their underlying training data. For instance, models trained on data up to 2021 will not provide

accurate “news” about the world’s events in 2022.

However, this is changing, as models can now be fine-tuned to respond to particular sources. In recent months, the use of an AI framework called “retrieval augmented generation” has evolved to allow models to use very recent data.

With this method, it would certainly be possible to use licensed content from a small number of news wires to create a news website.

While this may be convenient from a business standpoint, it’s yet one more potential way that AI could push humans out of the loop in the process of news creation and dissemination.

An editorially curated news page is a valuable and well-thought-out product. Leaving AI to do this work could expose us to all kinds of misinformation and bias (especially without human oversight), or result in a lack of important localised coverage.

Continued from page 13

The Law Association?

management legislation when the Environment and Resource Management committee connected with the Property Law committee, because we’re not resource management experts.

What is the biggest issue facing the legal profession right now?

Looking at the big picture, it’s the regulation of the profession and the question of whether lawyers should continue to self-regulate. I think it’s easier for a membership organisation to advocate if it doesn’t have the complications of being the regulator.

Have you done any media interviews/ provided any statements to the media in the past year as a committee convenor and spokesperson for ADLS/

Yes, I’ve done a lot of media. I’ve been on Fair Go a few times and get contacted a lot by various newspapers and radio shows. I’ve also been on The Panel. If people ask me to comment, I usually provide it and I often like providing it in writing, because that’s clear. It’s very hard to be misquoted if it’s there in black and white and journalists find it quite helpful. And this has given me a platform where I can now contact journalists and say, “Were you aware of this issue?” So, it works both ways.

What is your vision for the legal profession in 2050?

A diverse, inclusive, profession where we have work/life balance. That’s the nirvana! I do think the profession has improved in terms of workplace wellness, but a lot of people (me included) find it hard to say no. So that’s probably the biggest issue.

Cutting corners Australia’s News Media Bargaining Code was designed to level the playing field between big tech and media businesses. Since the code came into effect, a secondary change is now flowing in from the use of generative AI. Putting aside click-worthiness, there’s currently no comparison between the quality of news a journalist can produce and what AI can produce.

While generative AI could help augment the work of journalists, such as by helping them sort through large amounts of content, we have a lot to lose if we start to view it as a replacement. ■ Rob Nicholls is an Associate Professor, regulation and governance at UNSW in Sydney ■ The above first appeared in The Conversation and is republished with permission

What do you think The Law Association could do to improve its offering to members?

We provide a lot of services for members such as through the Documents and Precedents committee and we provide documents and relevant tools to help people practise better in a compliant way with trusted documents. We provide education through CPD, and advocate for lawyers and the community on important issues and legislative change. We are always open to feedback on how things can be improved. We need to work on reflecting the diversity of the profession and the community and strengthening our connection to our members across the country and also ensure we continue to get younger members contributing. ■ If you’d like to find out more about The Law Association’s committees, please contact Daniel.Conway@thelawassociation.nz or Moira.McFarland@thelawassociation.nz ■

The Annual Property Law Conference 2024 Thursday 29 February | 12.30 – 5.00pm 4 CPD hours | In person Auckland and online

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