The article Criminalising Cartels suggested that the reforms would capture a large number of commercial arrangements, put commercial players involved in genuine commercial arrangements through the criminal courts, and make commercial decisions more costly due to the increase need for legal advice and compliance.

It was based on an early exposure draft of the Commerce (Cartels and Other Matters) Bill, not the Bill introduced to  Parliament in October 2011. The Bill is currently awaiting its first reading and referral to the Commerce Select Committee for further consideration. More information about the reforms can be found here or at www.med.govt.nz/cartels.

Section 292 of the Companies Act 1993 gives liquidators the power to recover payments made by a troubled business in the two years prior to its liquidation, and at a time when it was unable to pay its debts. The purpose of s292 is to ensure all unsecured creditors are treated equally and prevents one creditor receiving more from a troubled business than it would otherwise receive in a liquidation.

There is a true story of a business that was owed $60,000 by its customer. The customer agreed to repay the debt by regular instalments, and these were made. Eighteen months later, however, the customer went into liquidation. The liquidator attempted to recover every instalment. This didn’t go down well; nobody wants to ‘give back’ $60,000!

Defence

There is a defence available to creditors under the Companies Act, but it requires them to prove that when they received the payments, they had acted in good faith, they provided value for the payment, and that a reasonable person in their position, would not have suspected, and did not have reasonable grounds to suspect, the customer was or would become insolvent.

This defence is demanding due to the difficultly in satisfying the ‘good faith’ and ‘reasonable person’ elements.

The good faith element requires the creditor to show it honestly believed the payments would not put them in a better position than other creditors. They will fail if they knew the customer was experiencing financial difficulties, and if there were signs they were paid before other creditors. The reasonable person element is difficult because it doesn’t consider the creditor’s actual belief at the time payments were received. Rather, the focus is whether another person in the position of the creditor would, having regard to all the circumstances, have an actual fear that the customer was insolvent. Relevant factors include the age of the debt, whether cheques had been dishonoured or enforcement action taken, and whether a creditor had knowledge about the businesses’ poor cash flow.

Courses of action

The better course of action is to try and avoid the sting of s292 in the first place. This is difficult, as many businesses accept payment plans from time to time, and need to continue doing so to obtain payment in order to maintain acceptable cash flow. The following courses of action can help if your business finds itself in this situation:

» Always be aware that payments received for an outstanding debt could be vulnerable to attack

» Make sure you have registered your security interest on the Personal Property Securities Register (www.ppsr.govt.nz)

» If possible, obtain a personal guarantee from the directors/shareholders of the customer, and

» Try to get payments up front, or implement a debt collection policy that encourages fast payments, and stick to it.

Finally, always keep watch for signs indicating a business is in trouble and if concerns do arise, talk with us immediately for guidance on how to manage the situation.

Family businesses have long been part of New Zealand’s commercial landscape. It’s estimated that family businesses represent 75% of all businesses in New Zealand. However, despite their prevalence, many family businesses don’t survive beyond the second or third generation. This article gives some guidance to those who are either already involved in a family business, or are contemplating setting up a family firm.

The high failure rate of family businesses can often be attributed to family conflicts and a lack of formal planning.  Often familiarity is to blame for family businesses failing to carry out essential tasks, such as creating clear role descriptions, planning for the ongoing success of the business through the various generations, and documenting dispute resolution procedures and rules addressing governance and decision-making.

Independent directors/managers

As family members are very familiar with each other, it’s easy to lose a degree of objectivity and impartiality.  Accordingly, family businesses can greatly benefit from engaging an independent (and appropriately qualified) person as a director or manager. This person can provide impartial advice and guidance. They can help define roles and responsibilities, and carry out the performance and remuneration reviews of family members and other employees to help avoid contention in these areas.

Conflict resolution

Most families experience conflict, but the challenges arising from conflict can be multiplied when the family members are also in business together. We recommend that all family businesses should have a well documented dispute resolution strategy to ensure family disputes are resolved quickly. The strategy will usually include mediation. Engaging an independent mediator will help family members focus on the issue at hand, and prevent personal family issues clouding their ability to remain objective for the sake of the business.

Succession planning

Family members need to start thinking about the future of the business and plan ahead. Potential successors need to be identified early. Possible successors could be the current owner’s children or existing employees. Alternatively, the family business may need to consider appointing a professional manager or selling to a third party. It’s particularly important for parents and children to clearly communicate their expectations and intentions in regard to the future of the business. Parents often presume at least one of their children will take over the business only to find those children have other ideas.

Shareholder/partnership agreement

Business owners often presume that because they have a family business, they don’t need to address and record essential rules governing their relationship as business partners and the operation of the business. However, a shareholders’ or partnership agreement is just as important in a family businesses as in any other commercial enterprise. A good agreement will address key issues which, if not dealt with, will affect the success and survival of the business. Those key issues include:

» What happens if a business owners’ marriage or personal partnership dissolves?

» What will happen to the business if a principal member of the business dies or becomes permanently disabled, or wants to retire?

» How will disputes be resolved?

» Whose consent is required for different decisions within the business such as hiring and firing employees, setting employee remuneration, raising capital and entering into significant contracts?

If you have a family firm, start treating it like any other business and put in place the necessary rules, documents and plans to ensure its future growth and success through the generations.

»Good practice, and

» Scientific knowledge

While it’s clear that the owner or person in charge of livestock has a duty of care, determining the owner or person in charge is not always apparent.

Equity partners and company directors cannot turn a blind eye to the conditions under which animals are cared for or treated on a corporately owned farm. It’s a question of fact to be determined by a court as to who in a corporate structure is ‘concerned with management’.

Failing to provide for the needs of animals is a strict liability offence. As such the prosecution doesn’t have to show that the company directors or officers knew or should have known what was happening on any corporately owned farm. The onus is on the defendant to show on a balance of probabilities that they took all reasonable steps not to commit the offence.

Our advice is to take a high degree of care of any animals and livestock on your farm. If you’re unsure if you could have liability, please be in touch with us.

The new Agreement updates a number of clauses from the former Variable Order Sharemilking Agreement including (amongst other things):

» Increasing the minimum percentage of income derived from milk supplied to 22% from 21% for those with herds of not more than 300 cows and who agree not to share in the dividend related payment adjustment

» Amendment to the Dispute Resolution (conciliation and arbitration clauses), and

»Making provision for the fencing of farm home sections and safe places for children if they are to be at the cow shed while their parents milk.

Of critical importance is the completion of the farm specific details in the Agreement. It’s important both parties work through the Agreement together and complete the required details.

For employees who normally work on that day the holiday remains on the traditional day and your employee is entitled to that day off on pay. If they do work they are entitled to be paid time and a half for the hours worked and to receive a whole day’s alternate holiday.

An employee cannot be entitled to more than four public holidays over the Christmas/New Year period (Christmas Day, Boxing Day, New Year’s Day and 2 January). To determine what would be a normal working day consideration must be given to the employment agreement, work patterns, any roster system in place and the reasonable expectation of both parties.

While we have many protected trees in New Zealand, we also have laws that protect people or things against trees. Under those laws, you could potentially be held liable for something that your trees do. Learn how you may be able to protect yourself from your trees.

Mischief makers we can’t live without

We can’t live without trees. They give us natural beauty, oxygen, shade, firewood, paper, furniture – the list goes on.

But trees can also get up to all sorts of mischief. Their roots can grow and damage underground pipes. They can drop leaves and fruit, and clog up drains or rivers. They can grow so big they block your neighbours’ views. Their branches can interfere with power and telephone lines. They can prevent sunlight getting to roads causing them to ice up. Falling branches can cause significant damage.

The danger of just standing back and watching the garden grow

Because trees are mischief makers, over time laws have been developed so that trees and people can live peacefully together. Here are some examples:

» Your trees = your responsibility: Generally speaking, if you own land, you are the owner of trees planted on that land, and are responsible for what those trees get up to as they grow, whether or not you planted the trees

» Your trees vs your neighbours: If your trees are interfering with your neighbour’s property, your neighbours may ask that you trim or remove those trees. If you can’t reach agreement, your neighbours could even take you to court to seek a court order for trimming or removal of the trees

» Your trees vs your council: Local councils may include restrictions in local planning laws on where trees may be planted, so that trees (shelterbelts in particular) do not interfere with neighbouring properties or with road safety.

Local councils also have the right to require you to cut down or trim your trees if they are a potential problem to road safety

» Your trees vs network utility providers: Likewise, power and telecommunication companies have the right to require you to cut down or trim your trees where they are interfering with, or encroaching on, power or phone lines, and

» Your trees could get you in trouble: If you fail to cut down or trim trees despite being required to, or in emergency situations, councils and network utility providers have the right to cut or trim the trees themselves and charge you for it. If your trees cause damage to their infrastructure, the authorities can seek compensation from you.

Living alongside your trees

To help you to happily live alongside your trees, you can do the following:

» Before planting trees (in particular shelterbelts), investigate whether there are any relevant laws that may restrict where those trees can be planted

» Be aware of laws that restrict how big your existing trees can grow

» If trees are a key feature of a property you want to buy, as part of your due diligence, investigate whether those trees may now or in the future need to be cut down or trimmed to comply with relevant laws

» Keep branches (and maybe even roots) regularly trimmed so they do not get out of control, and

» Act quickly if you receive a letter from a relevant authority asking you to cut or trim your trees.

By taking the steps above, you may not only protect yourself from liability, but also you may protect your trees from having to be cut down.

You most probably use your farm in a variety of ways, some of which would not always be expected with rural land, for example, a road-front retail shop for selling excess produce, your own airstrip for fertiliser application purposes, or a dirt bike park to indulge in your favourite hobby. But did you know that even if you are the second or even third generation to use your land in this way, you are not necessarily entitled to keep doing so . . .

Evolving nature of the law about how you can use your land

Just being the owner of land doesn’t give you the right to use that land in every way your heart may desire. Modern property law is said to be based on the assumption that the landowner holds their land for the public good1. With what is considered to be the ‘public good’ constantly changing and evolving, rules about how landowners may use their land are continually being introduced or changed.

But as rules change you do not necessarily have to stop doing things that do not comply with the new rules. You just have to be savvy about what you can, and can’t, do.

You may well have the right to continue doing what you have always done

Even though District or Regional Plan rules may have changed since you first started a particular use of your land, it is possible that you may have ‘existing use rights’ to continue that use even if it contravenes the current rules.

The ‘existing use rights’ rules are contained in the Resource Management Act and are an exception to the general rule that landowners may not carry out any activities on their land that breach the relevant planning rules unless they have resource consent to do so. The specific existing use rights rules applying in any particular situation will depend on what the activity is, where the activity is undertaken, and whether the activity contravenes rules under the District Plan or the Regional Plan or both. To rely on the existing use rights rules for a particular activity, the landowner must be able to prove that the relevant conditions of the rules applying to that activity are met.

For example, you may have a road-front retail shop at your farm gate which you first started 15 years ago but is now contrary to current District Plan rules. You may have ‘existing use rights’ to continue to operate that shop, if you can prove the relevant conditions are met. These may be that:

» The retail shop was ‘lawfully established’ before the relevant rule came in, ie: it did not breach previous planning rules. This may require a bit of investigation of what those previous rules were, going back to when the activity first started

» The effects of the retail shop are ‘the same or similar in character, intensity, and scale’ to those which existed before the new rule came in. For example, you haven’t enlarged it, its opening hours are the same, it doesn’t generate more traffic, and

» You haven’t discontinued use of the retail shop for a continuous period of 12 months. For example, that you have routinely opened the shop during summer every year since you first opened the shop 15 years ago.

Being proactive

To have your chance to prove to the council that you have existing use rights, you don’t have to sit around waiting for someone (such as a new neighbour) to complain about what you are doing. Instead, for certainty, and if you think you have sufficient evidence to satisfy the council that your use of the land complies with the relevant conditions of ‘existing use rights’, you can apply to the council for an ‘existing use certificate’. And even if you do not meet the criteria for existing use rights, all hope is not lost as you may well be able to get resource consent for the activity.

1 1936 W Ivor Jennings, cited in Hadfield v Rivers (High Court, Christchurch CIV 2006-409-678, 25 May 2006 at para 51

Operating Account and Long Term Maintenance Fund. The next important date is 1 October 2012. At that time the existing body corporate rules are all revoked. Before 1 October all bodies corporate should review their existing rules and prepare new operational rules for their development. Those new rules must be notified to the District Land Registrar following the body corporate’s approval.

The other important obligation is for bodies corporate to have a 10-year maintenance plan in place by 1 October 2012.