The Residential Tenancies Amendment Act 2019 ("RTAA") was passed on 30 July 2019 and came into effect on 27 August 2019. The RTAA addresses key issues that have implications for both landlord and tenant including: tenant liability for damage, insurance statements, contamination of premises and unlawful residential premises.
Tenant liability for damage: The RTAA provides that if tenants or their guests damage a rental property due to their careless behaviour, the tenant will have to pay for the cost of the damage up to (whichever is the lower) a maximum of four weeks' rent or the landlord's insurance excess.
This amendment aims to encourage tenants to look after the premises they are renting, while ensuring they are not responsible for unreasonable repair costs. On the other hand, it also ensures that landlords are not burdened with the entire repair cost as a result of their tenant's damage to the premises.
Notwithstanding the above, tenants are still fully responsible for the cost of intentional damage to the premises.
Insurance statements: Landlords must provide a copy of their insurance details to the tenant, including whether the property is insured, and if so, what the excess is. With an existing tenancy (pre 27 August 2019), the tenant can request this information from the landlord. If the landlord does not provide the information, or inform tenants of changes to insurance details, the landlord may be fined with up to $500.
Contamination of premises: Landlords can test for meth contamination, while the rented premises are occupied, by giving tenants at least 48 hours' notice.
Landlords must notify their tenant that they are testing for meth and the tenant has the right to see the test results.
Recently there have been discussions regarding meth testing and what the acceptable standard of contamination (if any) is. The RTAA allows for regulations (yet to be introduced) for determining the process for testing, the acceptable contamination level, and the decontamination process. Landlords will not be able to rent premises that they know are contaminated at an unacceptable level.
Unlawful residential premises: Under the RTAA, the definition of 'residential premises' is amended so that even if a premises cannot be legally lived in, such as a garage or industrial building, but is lived in or intended to be lived in, they will still fall within the definition of a residential premises and accordingly be captured under the RTAA and fall within the jurisdiction of the Tenancy Tribunal. The Tenancy Tribunal can enforce the RTAA against landlords who breach the RTAA regardless of whether the premises are suitable for living in or not.
This change ensures that landlords are providing premises that meet all requirements relating to buildings and health and safety.
If a landlord provides an unlawful residential premises to their tenant, the landlord may be liable to pay all or some of the rent back to the tenant, the tenancy may be terminated, the landlord may be liable to the tenant for damages, or any other order the Tenancy Tribunal may provide.




 

Whether you are planning to become a landlord or tenant, we suggest speaking to your lawyer to assist with preparing a tenancy agreement in accordance with the RTAA. If you are an existing landlord or tenant, we suggest you revise the rights and obligations under the RTAA with your lawyer to ensure your tenancy arrangement(s) are compliant under the RTAA.

Business trusts: A business trust generally holds assets that are separate from family and personal assets to protect you from a business failure or major loss. It also protects your personal or family assets from potential creditors. A common scenario is to have your business trust own shares in your private company, which allows dividends to flow through the business trust and to the beneficiaries. A business trust provides for succession planning if a business partner dies or becomes incapacitated, and also may result in tax advantages.

Charitable trusts: A charitable trust as the name implies, is a formal arrangement set up for a charitable purpose. This can relate to relieving poverty, advancing education, religion or any other matter that benefits the community. The benefit of a charitable trust is that as a donor, you can provide long-lasting contributions that continue after your lifetime. Furthermore, registering a charitable trust with the Charities Commission can provide tax advantages.
Whether a trust is suitable for your needs is best determined by a lawyer. This article is simply an overview of the more general points about the common trust structures. Each case is different as it depends on the purpose of the trust. It is advisable to discuss your overall asset planning goals, financial and relationship situations with your lawyer who can also liaise with your accountant (if applicable) to determine the best course of action for you.

A Calderbank offer, otherwise known as a "Without Prejudice Save as to Costs" offer, is a tactic that can be used to settle a dispute for a lower amount and avoid going to a court trial.
This tactic is named after a case from 1975 in the English Court of Appeal, between Mr and Mrs Calderbank.
A Calderbank offer is an offer made by one party to the other side of a dispute. It puts the other side on notice that if the dispute goes before a court, and the outcome is less favourable to the other side than the Calderbank offer being made to them, the party making the offer is entitled to more of their costs of the trial process being recovered, as the court may take into account the offer when they decide on the costs awarded.
It was decided in the 1975 Calderbank v Calderbank case that the offer, made by Mrs Calderbank before the dispute proceeded to the courts, showed she had a willingness to settle the dispute. If Mr Calderbank had accepted the offer that was made to him before trial, then he would have actually been in a better position as the judgment was less favourable to him than Mrs Calderbank's offer, and neither party would have had to go through the court process. It was also held by the court that Mrs Calderbank was entitled to her costs as from the date that she made her willingness to settle known.


 

Either side of a dispute can make a Calderbank offer. If the defender of a dispute offers to settle out of court but for a lower amount than is being pursued, and the plaintiff rejects the offer, this Calderbank offer may be taken into account by the Judge when costs are being awarded. The plaintiff may be successful in their claim against the defendant in court, but for a lower amount than what the defendant offered them to settle out of court in their Calderbank offer. In this situation, the Judge can reduce the costs that are payable by the defendant to the plaintiff, leaving the plaintiff with an even lower amount in the end than first sought.
In the same dispute, it may be the plaintiff that makes a Calderbank offer to the defendant to accept to settle out of court for a lesser amount than they were originally claiming. If the defendant thinks they may get a better outcome at trial and refuses this offer, and the plaintiff is awarded a greater amount at trial than their Calderbank offer, the plaintiff may be able to seek increased costs from the defendant.
It is important to weigh up carefully whether to make or to reject a Calderbank offer. It is important to work out if you would want to make such an offer, and when you would make it, as costs are awarded from the date a Calderbank offer is refused. It is equally important to consider at what point you would want to refuse an offer, and similarly when you would be prepared to accept it and settle the matter without proceeding to court.

Land covenants place rights and obligations on the land/property you own. It is an instrument that is registered on a record of title for a property that runs with the land, which creates a legal obligation to do, or not to do, something in respect of the land/property.
Such restrictions can relate to anything from the colour of your house or what you use the property for; to where you put your rubbish or park your vehicle. These restrictions are commonly found in new suburban subdivisions to maintain the quality of the neighbourhood.
If you, or your neighbour, breach one of the covenants, steps can be taken to enforce and rectify the breach.
In recent times it has become more common to put a time limit on covenants. For example, if you are required to only use certain materials for building your home, in 30 to 40 years those materials may be out of date and the covenant more burdensome than beneficial. In some cases, covenants are no longer enforceable as the current law no longer supports them.
Processes to enforce a breach will largely depend on what is written in each individual covenant instrument.
Common practice is to give written notice to your neighbour specifying the breach, the work to be undertaken, whether you believe contractors or workmen need to enter the land to remedy the breach, and the consequences that will follow should the notice not be adhered to.
Under section 310 of the Property Law Act 2007, your neighbour will have 15 working days to respond to your notice. If they do not respond in this timeframe, then it can be treated as them agreeing with what was written.
You can then take action to rectify the breach and pass all reasonable costs on to your neighbour. However, your neighbour is entitled to respond with a cross-notice if they believe there has been no breach or they are not liable.

 

In light of recent events like the Christchurch earthquakes, and the Australian bushfires and flooding, it really does hammer home the importance of having insurance in place for your residential and commercial properties. As lawyers, we see the repercussions for clients who face the devastating reality that they were not sufficiently insured for such events.
Not many people are aware that specified insurance can be required in areas of high risk of natural disasters. In particular, in areas such as Christchurch, we see an increased requirement from lenders that the insurance provider has earthquake cover specifically noted on the policy, as natural disaster cover is not specific enough. Furthermore, provisions can be made in the sale and purchase of homes for the potential to assign any Earth Quake Commission ("EQC") claims or ongoing works applicable to that home. Thus, providing the benefit of a claim to the purchaser.
If you own private insurance that includes fire cover, when a natural disaster strikes you can also be entitled to insurance cover under an EQC claim. As of 1 July 2019, EQC has increased its coverage from $100,000 plus GST to $150,000 plus GST in accordance with the 2019 amendments to the Earthquake Commission Act 1993 ("the Act"). As of July 2020, the Act will also seek to phase out any EQC cover for contents damage as a result of natural disaster. The Act has instead allowed for the increase in the total house cover, as noted above. For those without private insurance though, this option is not available.


 

As part of the 2019 changes to the Act, we have also seen an extension of the time frames for someone to make a claim, whereby as of February 2019, a claim may be lodged within two years of any incident, as opposed to the previous two-month period.It must also be noted that an EQC claim can be limited in its scope, whereby a private insurer will need to pick up some of the other costs. Most insurers include this as an excess in your insurance policy, but it can cover damages to items such as the driveway, swimming pool and fences which an EQC claim will not cover.
As the saying goes, "you don't know you need it, until you need it", it is much the same for insurance. As most home owners in NZ have lending over their property, they will already have some form of insurance coverage to protect them as a requirement of their lenders. However, the vulnerable can be those who own their homes outright and are not necessarily required to hold insurance.
If we can take anything from the devastating disasters like the Christchurch earthquakes and bushfires in Australia, a natural disaster can be unpredictable and devastating in nature. Ensuring that not only do you have cover for the property in question, but you are also confirming that you will be entitled to further EQC cover, is a vital move for any home owner or business owner to minimise the impact of a disaster.
We would always suggest that insurance is a vital consideration of owning any property or home. In particular, if you live in an area that is known to be at risk of a natural disaster then the idea of insurance and potentially choosing further natural disaster add-ons to your insurance policy should be a very serious consideration.
 

Statutory entitlement for sick leave

We all get sick from time to time, and New Zealand law in the form of the Holidays Act 2003 recognises that an employee will be paid for some of those times, and rightly so.
As a general rule, the minimum sick leave available is five days per year. Employees receive another five days sick leave for each twelve month period following on from that. This entitlement should be enshrined in an employee's agreement with their employer.
A prerequisite to using sick leave is that an employee must have been in the same job for a continuous period of six months. There are also a minimum number of hours each week that underpin the entitlement.
Sick leave is available if an employee is sick or injured, or when a spouse or partner who depends on the employee is sick or injured. The availability of ACC is relevant when injuries occur.
Longer sick leave periods can be negotiated with an employer. Any unclaimed leave can be carried over from year to year, but accumulation options are to be clarified on a case-by-case basis.
But who wants to be sick!

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