LawNews - Issue 18

NEWS Jun 11, 2021 Issue 18

Inside ■ TRUST LAW

First significant decision under new Trusts Act p11

■ INSURANCE LAW

What is a ‘deliberate act’? p10

Are lawyers’ fees the biggest

adls.org.nz

BARRIER TO JUSTICE ?

Contents 03 LITIGATION COURTS FEES

Out of reach: the effect of high legal fees on access to justice

07 BUILDER EMPLOYEE CONTRACTOR

Employment Court rules on key contractor/employee case

09 TRUSTEES BENEFICIARIES ASSETS

Has Clayton been the key to unlocking trust assets?

11 ADDLEMAN DISCLOSURE SOLE TRUSTEE

Key Supreme Court ruling on disclosure and the new Trusts Act

03 14 ADLS EVENTS

Chief Justice Dame Helen Winkelmann

16 FEATURED CPD

17 CPD IN BRIEF

We have reason to suspect that the rising number of unrepresented litigants before our courts is just the tip of the iceberg

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

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Cover: annestahl / Getty Images

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Jun 11 2021

Photo: Llgorko / Getty Images

Issue 18

LITIGATION/THE COURTS

Are high legal fees the elephant in the room?

Providing access to justice in a truly equitable way is one of the most difficult problems for a society to solve.

Rod Vaughan & Jenni McManus Within legal circles, access to justice – or the lack of it – has become almost a cliché.

Since Chief Justice Helen Winkelmann first raised the issue in her Ethel Benjamin address in 2014, describing it as “the critical under-pinning of the rule of law in our society”, several separate but connected initiatives have begun to try to make the courts more accessible to ‘ordinary’ New Zealanders and to improve their experience with the justice system once they get there.

In one corner, Chief District Court Judge Heemi Taumaunu is leading an initiative, Te Ao Mārama, aimed at mainstreaming some of the best practices of our therapeutic courts, such as the AODT (Alcohol and Other Drugs Treatment) Court and the restorative justice solutions of the Rangatahi courts, thus making them available to a wider group of offenders.

A major driver behind Te Ao Mārama is the disproportionate percentage of Māori in prison: for example, while only 24% of those attending youth court are Māori, they make up 60% of court appearances.

In another corner, the Rules Committee has a second consultation document in the market, seeking submissions on its proposals to streamline and reform civil justice, principally in the District Court.

In a recent article, Rules Committee chairman Justice Francis Cooke discussed the need for cultural change among litigators – specifically the need to move away from what he describes as the “maximalist” culture where counsel leave

no stone unturned and, in doing so, fail to take advantage of procedures already in place in the District Court to reduce costs for clients.

Submitters to the Rules Committee’s first consultation paper made it clear that without cultural change, rules reform would do little to close the justice gap, Justice Cooke said.

But many practitioners and their clients believe these changes – while significant and worthy in their own right – do not address the real elephant in the room: the spiraling cost of legal fees.

Chief Justice Dame Helen Winkelmann made passing reference to the problem at a recent ADLS breakfast when, in response to a question from the floor, she observed that “if this profession is to have long-term relevance, that it’s actually serving the part of society that is not just the top end of town, then it will have to find a way to increase its client base to provide access to justice not just to those who can afford $350 hourly rates”.

Worryingly, others in the room quietly noted that her number “might be on the light side”. And while many employed lawyers are charged out at more modest levels, top barristers can easily command four-figure hourly rates.

Out of sync In her submissions to the Rules Committee, Dr Bridgette Toy-Cronin, a director and senior lecturer at the University of Otago, put it bluntly: “The primary cost of litigation is lawyers’ fees.”

Lawyers’ fees are rising faster than general incomes, she said. As an example, between 2015 and 2016, the median weekly income rose by 4.3%. But over the same period, the charge-out rate for employed lawyers – “generally the cheapest kind of lawyer” – rose from $270 an hour to $292.70, a rise of 8.6%. Toy-Cronin said there was no reliable data on what partners, barristers and QCs were charging clients but their fees were likely to be rising by a similar percentage.

Toy-Cronin concluded that paying a lawyer or a team of lawyers to run a two-week trial was ‘out of reach of all but the very wealthy New Zealanders’

“We do not have sufficient evidence to determine to what extent procedure is contributing to unaffordability [of justice] but we do know that the expense of litigation is not solely caused by procedural factors,” she told the committee.

Continued on page 04 03

Continued from page 03

“Court procedures can minimise the number of hours that can be justified for each step of the litigation but it cannot change the underlying structure of fees, nor can it control what lawyers do on a file. The reasons for the expense of legal fees are complex and so are the responses to lowering them.”

In a second submission to the committee, Toy-Cronin used a costs award against former Deputy Prime Minister Winston Peters to illustrate her argument.

Peters, who lost his breach of privacy claim against two former National Party ministers and several government officials in 2017 in a case involving leaked details about his superannuation, was ordered to pay $320,000 in costs – an amount Toy-Cronin describes as half the value of an average New Zealand house at the time.

Equally worrying, the government’s lawyers revealed they’d asked for a costs award of $645,000 which, they said, was “only partial indemnity”. That amount, Toy-Cronin observed, would have almost bought an average house which, at the time, could be had for $700,000.

She concluded that paying a lawyer or a team of lawyers to run a two-week trial was “out of reach of all but the very wealthy New Zealanders”.

Shut out Chief Justice Winkelmann says it is difficult to assess the extent to which the price of justice is acting as a barrier to would-be litigants because no formal measures are kept in New Zealand. “[But] we have reason to suspect that the rising number of unrepresented litigants before our courts is just the tip of the iceberg.

The expense of litigation is not solely caused by procedural factors. The primary cost of litigation is lawyers’ fees

“There are many reasons for this, but foremost amongst them is the cost of legal representation and, to meet that cost, a reduced ability to access legal aid.

“As to who is most disadvantaged, there are no empirical studies of which I am aware that attempt to measure this. But, given our knowledge of how the legal system operates, I believe we can conclude that it is those who live in poverty and low-income earners.

“Logic would also tell us that anybody else pushed to the margins of our society by reason of disability, language barriers or whatever other reason may lack the means and will probably lack the knowledge to engage with legal processes in order to access their legal rights.”

The implications for those who cannot afford to access the 04

courts are far-reaching.

“Those who have no ability to obtain advice about their rights, or to seek a remedy when they have been wronged, are vulnerable to exploitation. The OECD report Access to justice and the Covid-19 pandemic published last year shows that an unmet justice need has a significant adverse impact on people and their whānau.

“The report describes a complex and bi-directional relationship between unequal access to justice and broader socio-economic inequalities. It also gives an account of how legal and justice services play a major role in restoring economies, social cohesion and confidence in institutions.”

Referencing the Rules Committee’s work on reforming civil justice, Justice Winkelmann said: “Submitters identified that inequality of access to civil justice has the potential to erode individual dignity, insofar as it risks some individuals being able to wrongfully abrogate the rights of others with practical impunity, contrary to law, in a manner therefore corrosive of rule by law.

“They said that widely-held conceptions of ‘justice’ require that everybody in society be able to affordably access impartial tribunals in which they feel able to understand the applicable rules of law and in which the truth is fearlessly and expeditiously identified….

“The feedback received was supportive, overall, of significant change to the High Court’s presumptive procedural model…. As to the District Court, serious concerns were raised that inadequate judicial and registry resource is devoted to civil matters. Work is already underway to address this…. I believe that there is potential to

Jim Farmer QC

Jun 11 2021 Issue 18

Continued from page 04

take some of the complexity out of that basic structure, and thereby reduce cost.”

In her view, access to justice “is as much a part of the infrastructure of a functioning society as any part of our built environment – arguably more so. I would describe it as a critical part of the social infrastructure.

“As to why difficulties with accessing justice have persisted for so long, part of the reason is that there are many factors that contribute to the problem and therefore many people who must contribute to the solution.

The courts must play their part by creating accessible processes. But the profession must also find a way to make legal services more affordable. I do think the profession must come up with different pricing models to increase the range of those able to afford their services

“The courts must play their part by creating accessible processes. But the profession must also find a way to make legal services more affordable. I do think the profession must come up with different pricing models to increase the range of those able to afford their services.

“There is a pressing need for our legal aid system to be invested in both by the executive (in terms of legal aid rates, and eligibility thresholds) and by the profession, by signing up as legal aid providers.

“It is also important to acknowledge that providing access to

justice in a truly equitable way is one of the most difficult problems for a society to solve. I don’t think we’ll ever be in a situation where we are satisfied with the level of access that is provided. But I have no doubt we need to do better than we are today.”

There is, however, some light on the horizon. Justice Winkelmann says she hopes the profession will get behind Te Ara Ture, the new service matching lawyers wanting to do pro bono work with people needing legal services. There are also innovative moves afoot from the NZ Bar Association and NZLS to encourage lawyers to sign up to be a legal aid provider.

“I am also pleased that the criteria for the appointment of Queen’s Counsel have been amended to recognise commitment to improving access to justice as one of the characteristics reflecting the top echelon of barristers in New Zealand,” she said.

Unrepresented litigants Among the by-products of high legal fees has been the rise in the number of ‘lay’ litigants, also known as ‘unrepresented’ litigants or ‘litigants in person’.

Jim Farmer QC, one of New Zealand’s most senior barristers, has described as “staggering” the number – 50% of litigants – applying for leave to take cases to the Supreme Court.

At an ADLS dinner in March last year to celebrate Justice Winkelmann’s first year as chief justice, Farmer said he concurred with her view that lawyers were often not cost-effective and agreed that using time and attendance as a basis for fixing legal fees removed the incentive for lawyers to be efficient.

“Fees, in my opinion, need to be fixed in reference to the amount and importance of the issues in a particular case,” he said. “Overall, I think lawyers should, as I did when I started in practice, take a ‘swings-and-roundabouts’ approach, doing a case on the cheap as it won’t bear a big fee but [you’ll also get] other cases that might.

“I don’t see why we should go back to that and why the hourly rate governs everything.” ■ Next week: hourly rates or fixed fees? ■

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09 303 5270

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You would like to work in a city fringe location with good access to the CBD. Please email expressions of interest to advertiser@adls.org.nz quoting reference: Partner 0521

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‘

Briefs

Worse than useless’ In what The Australian dubbed an “extraordinary” speech this week, the Chief Justice of Western Australia warned lawyers that “justice was not just about them” and that the profession needed to be wary of turning the pursuit of justice for its clients into a self-serving exercise.

Empathy among lawyers needed to be “genuine and not performative”, Chief Justice Peter Quinlan told a gathering at the Piddlington Society.

Justice Quinlan also said watching a litigant being represented by a lawyer out of his or her depth was like watching a train crash in slow motion and caring about a client without being able to deliver a benefit was ‘worse than useless’. Justice Quinlan is a former state solicitor-general and a former President of the West Australia Bar Association.

Taxing times In a breakthrough after years of effort to overhaul international tax laws, G7 officials reached broad agreement on ways of preventing large multinationals from seeking out low-tax jurisdictions and tax havens in which to book their profits. The group agreed to push The group agreed for a global minimum company tax rate of at least 15% and to ensure to push for a global minimum companies paid tax in the jurisdictions in which sales were made, company tax rate no matter where their headquarof at least 15% ters were located and regardless of whether they had a physical and to ensure presence in countries where their companies goods and services were sold. The paid tax in the G7 countries now need to sell the idea to finance ministers from the jurisdictions in which sales were wider G20 group. Gaining support for a minimum global tax rate made hasn’t been easy. For example, Ireland, which has a company tax rate of 12.5%, opposed the idea and China is unlikely to buy in. The EU estimates the move will net an extra 48 billion euros ($US 58 billion) a year while the Biden administration estimates an extra $US500 billion over 10 years.

Most liveable city The Economist Intelligence Unit has named Auckland as the world’s most liveable city, largely because of its success in controlling Covid-19. The annual survey, done across 140 countries, considers factors such as stability, healthcare, culture and environment and infrastructure. Also in the top 10 was Wellington, coming in at fourth place, four Australian cities and two in Japan. ■

Jun 11 2021 Issue 18

EMPLOYMENT LAW

Employment Court rules in yet another employee-contractor case The way the judge has written this, it applies to every worker in New Zealand. She is the chief judge. This is the second time she has written a very clear judgment about the legal test and how s 6 is to be applied

By Diana Clement

dismissed.

The situation will become worse with enhanced sick leave shortly to come into force and a new A just-released Employment Court decision classifyMatariki holiday, says Pollak. ing a builder as an employee, not a contractor, should “This is a huge story. And it is a terrible indictment apply to every worker in New Zealand, says employon our government. Inland Revenue should have been ment lawyer Garry Pollak.

Pollak, who acted for builder Ross Barry in his claim enforcing employment agreements, like Leota and like this, because they are illegal. They should be pursuing against CI Builders Ltd (CIB), is calling on the IRD businesses for PAYE, and they’re not doing it.” to take note of the decision. And so too should the Davis, who gave evidence at the hearing, says the Department of Labour, says Amalgamated Workers Department of Labour should Union secretary Maurice Davis. be acting on sham contracts Employment Court chief The Department that are rife in building and other judge Christina Inglis earlier this of Labour should industries. week ruled in Barry’s favour, be acting on sham The case centred on s 6 saying the actual nature of the relationship was one of contracts that are rife of the Employment Relations Act 2000, which sets out the employment, even though Barry in building and other meaning of an employee. Judge had accepted the job as an industries Inglis noted that s 6(3)a, b, independent contractor. consider labelling and intention, The decision comes hard but both are part of the section on the heels of a similar case, s 6(2) real-nature-of-theLeota v Parcel Express Ltd, relationship puzzle. “If it were otherwise, the underlying where a courier driver, also represented by Pollak, purpose of s 6 in particular, and the objectives of the argued successfully that he was an employee and not legislation more generally, would be undermined.” a contractor.

Up to 20 % of New Zealand workers, often The facts concentrated in industries such as building, transport, cleaning, security and other services could be Barry had been out of work for three years when he employed on contracts similar to those of Barry and met CI Builders’ owners Cameron Ireland and Rachael Leota, Pollak says.

Newnham and agreed to be engaged as an indepenEmployers do it to dodge the unions and to dent contractor and worked fulltime for the company. avoid paying normal employee benefits such as Judge Inglis ruled that the contractor label ascribed holidays, sick pay, maternity leave and even, at to Barry’s status did not accurately reflect the real times, the minimum wage. And as contractors, these nature of the relationship. workers cannot raise a personal grievance against Pollak noted the disparity of bargaining power their employer if they believe they’ve been unfairly between the business and individual worker in the

Leota and Barry cases. “That’s not real equality of bargaining,” he says.

In court both sides referred to the usual indicia for determining employment status which were set out in Leota. Answers to some of the questions cited in the decision included: that CIB had the right to exercise detailed control over the way Barry’s work was performed; he was integrated into the organisation; given his hours at CIB and his childcare arrangements, it was unrealistic for him to work for others; he could not subcontract or delegate work to others; tax was deducted from his pay at source; he did not supply his own tools; he did not bear risk of loss in the business or, conversely, have the chance of making a profit; and the business goodwill accrued to CIB. CIB, whose builds have won awards, had also claimed a Covid-19 subsidy for Barry, although this was said in court to be a mistake.

The ruling Although the judgment technically only applies to Barry, it has precedent value, says Pollak. “The way the judge has written this, it applies to every worker in New Zealand. She is the chief judge. This is the second time she has written a very clear judgment about the legal test and how s 6 is to be applied.”

Even so, employers will not give up on contracting arrangements overnight. “What they’re going to do is say ‘well this decision only applies to [Barry or Leota] and if anybody questions that I’ll deal with it when they question’.”

Leota had some positive benefits for other couriers even if it wasn’t a precedent. That Leota was earning less than the minimum wage was one important factor in proving he was an employee and not a contractor. “I do know anecdotally, after the Leota judgment, many courier companies increased their pay rates,” says Pollak. “So, if some smart aleck courier like Mr Leota comes along, the consequences for [companies] won’t be as severe.”

Although the court found in favour of Leota and Barry, Pollak lost a similar case relating to Uber driver Atapattu Arachchige. “I think the Uber one was just plain wrong,” he says, noting it was not presided over by the chief judge. ■ 07

PROPERTY LAW

Experienced Property/Commercial Solicitor We are looking for a successor to join our Commercial and Property team with an opportunity of short to medium-term partnership prospects where a following is not required.

Property lawyers warned about altered documents

The role requires a commercial and property lawyer who can demonstrate leadership skills and will suit a senior level lawyer looking to join a partnership, or an intermediate to senior level lawyer who has their eye on partnership.

In addition to leadership skills, building long-term client relationships will also need to form part of your key strengths to be successful in this role. The work will involve a broad range of commercial and property matters as well as other matters like trusts and estates that usually tie in with a commercial and property practice in the regions.

We also have a well-established litigation practice to hand contentious matters to. We have plenty of support staff and modern technology, ensuring you will not get tied up in junior level work and allowing you to focus on more complex and juicy work.

For someone who might still need a bit of guidance, there will be an experienced partner you can turn to who will support you in your path to become a partner.

We value work/life balance and although we are proud to offer a superb service to our clients, we are not just all about producing fees. You will certainly have the time to enjoy the relaxed Gisborne lifestyle with its sun, surf and social life in the heart of the wine country.

Please forward your letter and cv to Amanda Matthews; amanda.m@woodward-chrisp.co.nz

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Photo: Hannah Peters / Staff / Getty Images

We have very senior members of our team looking to retire and who would love to hand over their well-established client base. We have been providing legal services in the Gisborne district for more than a century and we have been acting for families and particularly farmers, for generations. We also complete work in the forestry sector, act for SMEs and for individuals.

Advances in technology have enabled document security to be circumvented with certain software.

ADLS has become aware of instances where changes have been made to the general terms of ADLS/REINZ standard forms in ways that are not apparent or obvious.

The incidents have been infrequent but are of deep concern and ADLS and REINZ are taking the issue very seriously.

In addition to other potential liability, lawyers will be aware that their ethical obligations to their colleagues preclude them from making non-obvious changes to the standard wording of an ADLS (or ADLS/REINZ) form without alerting their colleague acting for the other party in the transaction.

After ADLS brought the matter to REINZ’s attention, REINZ has made it clear to its members that this practice is prohibited.

ADLS is aware that more far-reaching measures are required The steps taken to date are aimed at immediately curtailing the activity but ADLS is aware that more far-reaching measures are required.

Urgent discussions are taking place between ADLS and REINZ with a view to implementing further solutions and we will update the legal profession on these developments when we can.

In the meantime, firms should consider how they wish to deal with the issue within their practices.

We also ask the legal profession to immediately report to ADLS any further occurrences of imperceptible changes being made to ADLS or ADLS/REINZ forms by contacting the Professional Services Manager via email: Melissa.Fini@adls.org.nz ■

Jun 11 2021 Issue 18

TRUST LAW

Clayton not the key to unlock trust assets If the existence of two trustees whose need for unanimity in decision-making is sufficient to safeguard a trust from a Clayton attack, it is obviously sensible for the trust to be structured so there

Sensible precaution

One of the default duties under the new Trusts Act is that ‘a trustee must not exercise a power… directly beneficiary or indirectly for the trustee’s own benefit’. This duty should obviously be expressly negated in all trusts where it’s intended that a trustee will also be a beneficiary. appoint and remove trustees was of its Anthony Grant In a trust where it is intended that a nature a fiduciary power and in doing so, trustee should also be a beneficiary, it she has relied on well-established New is desirable that the trust should have In the Clayton (Vaughan Road) decision [2016] 1 Zealand authorities. two trustees: Clark J held that with the NZLR 551 the Supreme Court said the powers Mark Pinney could not therefore exercise presence of two trustees ‘Mr Pinney is Clayton held in a trust were ‘property’ for the purposthose powers for ‘purely selfish interests’. unable to pay or apply the entire trust es of the Property (Relationships) Act, enabling his Nor could he exercise the powers ‘or a capital to himself [and] he cannot bring wife to access some of the trust’s assets. collateral purpose’. forward the vesting date to one of his In the years since that decision was delivered, choosing’ [96]. wives and partners who wish to gain access to the Anthony Grant Fiduciary power Section 43(2)(c) of the Trustee Act wealth of trusts established by a partner during a 1956 required a trust to have at least two relationship have hoped the Supreme Court’s decision Justice Clark also held that a power of trustees unless one trustee was originally appointed. would be a key that could unlock trusts and make resettlement was fiduciary in nature.

That provision has not been carried over to the Trusts their assets available to them.

Pinney had a power to remove beneficiaries and Act 2019. Even so, the underlying philosophy of the But attempts to use the Clark J held that the exercise of 1956 Act that a trust should have two trustees is a Clayton decision for this the power in favour of himself The judge held that sensible precaution to avoid the prospect that in purpose have failed and the would potentially constitute a the exercise of the the Clayton environment a trust will be invalidated latest case, Pinney v Cooper fraud on the power. because the trustee may be able to self-benefit [2020] NZHC 1178, a decision of power in favour The judge said that ‘if without fiduciary or other constraints.

Clark J, makes it less likely that Mr Pinney exercised any of of himself would If the existence of two trustees whose need for the Clayton case will become the powers of distribution or potentially constitute settlement in favour of himself, unanimity in decision-making is sufficient to safeguard the hoped-for key. a trust from a Clayton attack, it is obviously sensible Marcus Pinney was a trustee a fraud on the power he would potentially be in for the trust to be structured so there are two trustees and discretionary beneficiary breach of his fiduciary duty or, if there is to be only one, for the trustee not to be a of a trust from the time of its to the other discretionary beneficiary. inception. His former partner, beneficiaries’. [93] There will be cases where the court will doubt that Raewyn Cooper, argued that the trust Pinney had I have some difficulty with this finding but it the existence of two trustees provides an adequate settled contained ‘property’ for the purposes of the appears not to be fundamental to the decision. The safeguard because of a belief that a co-trustee is just PRA which should be divided between them. difficulty is that Pinney was a settlor, trustee and a cipher for the first trustee and the existence of a Her arguments failed. discretionary beneficiary and in such circumstances it One of the reasons Mark Clayton’s trust had been is implicit that he was intended to be entitled to vote in second trustee does not provide a sufficient safeguard.

The solution is for the trust to be managed in such invalidated in the Vaughan Road decision was that he favour of a distribution to himself. His vote alone would a way that the second trustee can be shown to be could access the trust’s wealth without being subject not be sufficient as the trust required the presence independent and competent. ■ to any fiduciary constraints. Clark J has held that of two trustees so the second trustee would need to Pinney’s powers were different: they were the subject have supported his attempt to get a distribution for ■ Anthony Grant is an Auckland barrister of fiduciary constraints. The judge said his power to himself. specialising in trusts and estates

are two trustees or, if there is to be only one, for the trustee not to be a

09

INSURANCE LAW

What does a ‘deliberate act’ mean for insurers?

David Friar & Sam Hiebendaal

director, partner or employee of the insured…”.

intention to cause a specific injury.

In addition, a narrow interpretation would lead to arbitrary results – for example, the exclusion could apply if the bouncer intended to break someone’s nose by punching someone and did so, but not if the punch instead caused the person to fall and suffer a more serious injury.

Applying these principles to the facts, however, the Supreme Court ruled that the exclusion clause did not apply. Although the bouncer had been convicted of assault, which required an intention to perform the act of assault – ie, the neck hold – no finding had been made that the bouncer intended to cause injury.

What he did was ‘badly executed’ rather than ‘badly motivated’ and he believed he was acting in defence of other bouncers working at the bar.

Insurance policies, particularly directors’ and officers’ (D&O) policies, often contain an exclusion for deliberate or wilful acts.

These reflect the common law position that an insured cannot recover in respect of a loss he or she deliberately caused. But what exactly is a delibera​te or wilful act?

The UK Supreme Court recently gave a judgment that provides the answer, Burnett v International Insurance Company of Hanover Ltd [2021] UKSC 12. ​​​

Supr​eme Court decision

Implications for NZ

In New Zealand, the requirement for intention under a ‘deliberate acts’ exclusion has not received detailed consideration and the UK Supreme Court’s decision is therefore likely to be highly relevant to a New Zealand court

The insurer argued that the reference to a ‘deliberate’ or ‘wilful’ act in the exclusion clause is not limited to intentional acts, and that recklessness is enough.

The Supreme Court rejected this, ruling that the exclusion applied only to intentional acts and not reckless ones. It said while the term ‘wilful’ could include recklessness in some contexts, an exclusion for reckless acts in this case would “lead to a very wide and commercially unlikely exclusion”, given the nature of the insured’s business which was inherently likely The facts to give rise to situations in which people were at risk of injury.

The case concerned a claim made under a public The Supreme Court then turned to the meaning liability policy. It arose from an altercation outside an of an intentional act and, in Aberdeen bar between a Exclusions for particular, what the intention bouncer and a person who had must be directed at. been kicked out of the bar. deliberate or wilful Was it enough that the Unfortunately, that person acts are found in bouncer intended to cause an died during the altercation, due a range of other injury by applying the neck to a neck hold applied by the policies which apply hold? Or was it necessary for bouncer who was convicted of the bouncer to have intended assault, and was also liable for in different factual to cause the specific injury (ie, the death under Scottish tort contexts - for example, death) that occurred? If this law, which gave rise to vicarious they are commonly latter interpretation was correct, liability for the bouncer’s employer. found in D&O policies the exclusion would not apply because it was common ground The bouncer’s employer that the bouncer did not intend had public liability insurance to kill. covering liability arising from The court ruled that the exclusion requires the accidental injury. The deceased’s widow sued the bouncer only to have had an intention to cause an insurer for cover under the policy, under legislation injury, not the specific injury that resulted. giving her a direct right of action against the insurer.

It said this was the most natural interpretation of The insurer denied cover, relying on a clause that the clause. Further, the terms of the policy did not excluded cover for “liability arising out of deliberate provide any support for a narrow reading requiring an acts, wilful default or neglect by the insured any 10

A case on the same facts would be dealt with differently in New Zealand.

The death would likely be covered by the Accident Compensation Act 2001, which prevents compensatory claims from being brought in relation to physical injuries covered by the Act. The bouncer’s employer would therefore not have any liability to be insured.

However, exclusions for deliberate or wilful acts are found in a range of other policies which apply in different factual contexts. For example, they are commonly found in D&O policies.

The Supreme Court itself noted that its conclusion on the required intention could apply to a similar exclusion in a home insurance policy. A deliberate act would be one where there was an intention to cause damage to the insured premises. Australian courts have also reached similar conclusions in cases relating to home and motor vehicle insurance.

In New Zealand, the requirement for intention under a ‘deliberate acts’ exclusion has not received detailed consideration, and the Supreme Court’s decision is therefore likely to be highly relevant to a New Zealand court considering the issue.

However, as the Supreme Court’s decision illustrates, the proper interpretation of an exclusion clause in any specific case will depend in part on the context in which the policy has been taken out. As a result, it will not necessarily follow that the Supreme Court’s findings in this case will apply in different insurance contexts. ■ David Friar is a partner and Sam Hiebendaal a senior associate at Bell Gully ■

Jun 11 2021 Issue 18

TRUST LAW

CASE NOTE

Supreme Court rules on

trustee disclosure

under new Act Sacha Jugum Trusts Act 2019 – Evidence Act 2006 – appeal by sole trustee of trust in relation to the extent to which legal advice obtained by the trust should be disclosed to a beneficiary – applicable principles – procedure – scope of Court of Appeal order – extent of appropriate disclosure – status of beneficiary – statutory interpretation – primary purpose and funding of trust – trustee duties – extent of “joint [or common] interest” exception – precedent – appeal dismissed however scope of Court of Appeal order is clarified

Lambie Trustee Limited v Addleman [2021] NZSC 54 (William Young, Glazebrook, O’Regan, Ellen France and Williams JJ) See also Addleman v Lambie Trustee Limited [2019] NZCA 480 and Addleman v Lambie Trustee Limited [2018] NZCA 616 This decision will interest all trust lawyers, particularly for its discussion of the Trusts Act 2019 regime and general trust principles as stated in that Act: see particularly para 43-59.

Prudence Addleman’s sister, Annette Jamieson, has been a quadriplegic since 1972 when she suffered a swimming accident in Australia, and subsequently received just over A$1 million in compensation from the local council.

Jamieson’s compensation was placed in a trust and invested by her father in a highly profitable Auckland subdivision venture. Lambie Trustee Ltd

Part of the dispute centred around whether the trust had in fact been fully funded by the compensation payment

Do a trustee and beneficiary have a mutual interest in the appropriate administration of the trust and so privilege cannot be claimed in relation to legal advice

is currently the sole trustee of the trust and is controlled by Jamieson.

Addleman commenced court applications for disclosure of further information about the trust. The High Court dismissed her application for disclosure but the Court of Appeal reversed the High Court decision and ordered that Lambie provide Addleman with a range of documents, including legal opinions or advice that had been funded by the trust.

Lambie Trustee Ltd obtained leave to appeal to the Supreme Court on the issue of whether the Court of Appeal was correct to reject its claims of legal advice privilege and litigation privilege .

Applicable principles – this Supreme Court decision considers the extent to which legal advice obtained by the trust should be disclosed to Addleman – part of the dispute centred around whether the trust had in fact been fully funded by the compensation payment, or whether other funds had been applied – extensive consideration of what is termed the common or “joint interest exception”, that is, where a trustee and beneficiary have a mutual interest in the appropriate administration of the trust and so privilege cannot be

Sacha Jugum

claimed in relation to legal advice obtained in relation to administration of the trust – discussion of whether and to what extent certain legal advice is covered by that exception or whether it is more conflict-based and so would be covered by privilege – relevance of “threats of litigation” made by Addleman in relation to the type of advice obtained – detailed discussion of the Trusts Act 2019 regime, including “core documents” and disclosure principles – statutory interpretation of Trusts Act 2019 and the Evidence Act 2006 – whether a beneficiary in Addleman’s position could make inquiry of the trust as to its administration and arrangements – interpretation of the Court of Appeal’s order in relation to the disclosure of legal advice – assessment of the circumstances and history of the trust and decision-making by trustees at relevant times and the context of Addleman’s application – extensive discussion of overseas and New Zealand precedent, including Erceg v Erceg.

Held: [after consideration of all matters] Lambie Trustee Ltd’s appeal is dismissed. However, the Court of Appeal’s order is clarified to note that legal advice from a certain timeframe is not encompassed within that order.

Costs are reserved and the parties are to file submissions. ■ This decision and a media release summarising the main points are available here. ADLS is holding a webinar on this case on Wednesday 7 July. Click here ■ 11

ENVIRONMENT

MENTAL HEALTH

How mental health can affect RMA sentencing

The offences, which attracted strict liability, carried potential maximum penalties of imprisonment of up to two years and fines of up to $300,000 per offence

Anthony Rogers & Stuart Ryan The recent District Court decision in Auckland Council v M (CRI No. CIV-2019-004-011926) on 9 April highlights the potential relevance of mental health factors in Resource Management Act (RMA) sentencing decisions and regulatory offences more generally.

M, in his 50s, had not complied with an abatement notice requiring him to remove cars stored at his residential property in Auckland.

According to the summary of facts, there were between 30 and 50 cars stored at the property and there was a prior history with the council involving another property with a similar number of vehicles, extending over 10 years.

M wrote to the council requesting further time to comply with the abatement notice following the death of his father and other personal circumstances. The council charged M with breaching rules in its District Plan and for breach of the abatement notice.

Strict liability The offences, which attracted strict liability, carried potential maximum penalties of imprisonment of up to two years and fines of up to $300,000 per offence. M pleaded guilty to the offending at the initial sentencing hearing. The council sought a starting point of $70,000 (for the two offences) and an enforcement order limiting him to keeping not more than five ‘hobby’ vehicles at the property.

M applied for a discharge without conviction under s 106 of the Sentencing Act 2002. He filed extensive affidavit evidence as to the effects of a conviction on him. This included impact on travel overseas, with expert evidence from lawyers practising in the UK, Germany, Malaysia, Canada and the United States.

M relied on the decision of the Court of Appeal in R v Edwards which provides that a court will need to be satisfied that in the relevant jurisdiction the conviction must be disclosed, that the applicant is prima facie inadmissible 12

and that there is no alternative entry process available or that, if there is, such process is unreasonably difficult and uncertain in all the circumstances.

If the court is satisfied of these Stuart Ryan elements, then the sentencing court will need to be further satisfied that the offence is not so serious that it would be

Continued on page 13

According to the summary of facts, there were between 30 and 50 cars stored at the property and there was a prior history with the council involving another property with a similar number of vehicles, extending over 10 years

Jun 11 2021 Issue 18

Continued from page 12

wrong to allow the applicant to present himself or herself to foreign immigration authorities without disclosing it.

M also produced expert psychiatric and psychological evidence, including from an Auckland-based psychiatrist, a psychologist and an English neuropsychiatrist, Dr Peter Fenwick.

Hoarding disorder The evidence referred to M as having a hoarding disorder, depression exacerbated by grief from the death of his father and sleep apnoea.

Sleep apnoea was referred to as a serious sleep disorder in which the breathing repeatedly stops and starts during sleep, causing the person to wake. Symptoms in this case included feeling tired even after a full night’s sleep. M attended a sleep laboratory to monitor his sleep over two nights, which confirmed the diagnosis. He was recommended to use a continuous positive airway pressure (CPAP) machine as treatment.

The court received submissions on the relevance of mental health factors in sentencing. Dr Fenwick deposed that the severe sleep disorder (with which M had been diagnosed) would have led to a disorder of brain function that will have impaired his executive function.

The executive function is responsible for problemsolving, flexibility, decision-making and initiating appropriate responses and actions. Dr Fenwick deposed that this was relevant to M having difficultly complying with the abatement notice.

Subsequent to his diagnosis, M had been supplied with a CPAP device which improves the effects of sleep apnoea by keeping the airway open during the night. He had seen a psychologist who deposed that M’s adjustment disorder was now in remission.

M through his counsel had offered to pay the council’s agreed costs, undertake voluntary community service (of up to 100 hours) and agreed to an enforcement order (akin to an injunction) which required him to limit his vehicles on the property to not more than one ‘hobby’ vehicle, in addition to personal vehicles. The sentencing was adjourned for M to receive treatment, to pay the council and to undertake

community service.

Discharge ordered Updated psychiatric and psychological evidence was filed in court by way of affidavits. In discharging M without conviction, the Chief Environment Court Judge, David Kirkpatrick, said the consequences of convicting M would be out of all proportion to the gravity of his offending and the conditions described by the medical experts would likely be exacerbated by the stress of convictions.

Judge Kirkpatrick made the order for two main reasons.

The first was that M had sought and taken high-level advice to deal with the problems he had and the judge commended M for his efforts in this respect.

The second was that M had faced the environmental matters that were the focus of the abatement notice and the subsequent charges. The enforcement order M had consented to was stricter than initially proposed and he also covered the council’s costs of investigation. Judge Kirkpatrick considered this demonstrated a sense of accountability.

This decision is not the first time the subject of mental health has been brought up in an RMA sentencing.

In 2018, Lau appealed his sentence of imprisonment for numerous breaches of the RMA, which involved an ongoing flouting of various council rules. One of the grounds of appeal was that the court had not allowed a discount for Lau’s mental health impairment (ADHD) as the judge at first instance was sceptical about the impact of ADHD on the offences.

The High Court judge allowed a discount of 5% on account of Lau’s ADHD diagnosis because there was no evidence suggesting ADHD was directly causative of the offending but nevertheless the presence of ADHD provided a partial explanation. The court also considered Lau had found prison more difficult due to the diagnosis.

These decisions highlight the relevance of mental health factors in the sentencing process for regulatory matters, along with the importance of ensuring there is cogent medical evidence in support. ■

M also produced expert psychiatric and psychological evidence, including from an Aucklandbased psychiatrist, a psychologist and an English neuropsychiatrist, Dr Peter Fenwick.

The evidence referred to M as having a hoarding disorder, depression exacerbated by grief from the death of his father and sleep apnoea

Auckland barristers Anthony Rogers and Stuart Ryan acted for M at sentencing ■ 13

Events ADLS EVENTS

East Auckland lawyers’ lunch On Wednesday 2 June, East Auckland practitioners joined ADLS at Goode Brothers in Botany for lunch. Thank you to MAS, the event sponsor, for its continued support of our collegiality events program.

Alistair van Schalkwyk and Brad Botting

Nazir Ahmed and Richard Osborne

Les Divers and David Graham

Katherine von Biel and Sonja Palinich

Michael Blakeley and Raajan Sami

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Campbell Greig, Roxanne Stevenson and Bhavana Singh

Jun 11 2021 Issue 18

Featured events

Connecting New Zealand Lawyers

Wellington Breakfast with the Chief Justice Dame Helen Winkelmann Thursday 8 July 2021, 7.15am – 8.30am InterContinental, 2 Grey Street, Wellington Learn More

Christchurch Breakfast with the Chief Justice Dame Helen Winkelmann Thursday 19 August 2021, 7.15am – 8.30am The George, 50 Park Terrace, Christchurch Learn More

Retirement Dinner for Dr Bill Hodge Thursday 29 July 2021, 6pm – 10pm The Northern Club, 19 Princes Street, Auckland Learn More

Northland Lawyers’ Lunch

Upcoming June

Wednesday 23 | Northland Lawyers’ Lunch, Whangarei Wednesday 30 | New Lynn Lawyers’ Lunch, Auckland

July

Thursday 8 | Wellington breakfast with the Chief Justice Dame Helen Winkelmann, Wellington Thursday 29 | ADLS retirement dinner for Dr Bill Hodge, Auckland

August

Monday 9 | ADLS Newly Suited & LAWSOC Buddy Evening, Christchurch Thursday 19 | Christchurch breakfast with the Chief Justice Dame Helen Winkelmann

Soon to be added:

August | ADLS Newly Suited Meet the QCs Evening, Auckland August | Hamilton Sundowner August | Ponsonby Lawyers’ Lunch, Auckland September | Rotorua Lawyers’ Lunch September | Albany Lawyers’ Lunch, Auckland September | Auckland Central Lawyers’ Lunch

Wednesday 23 June 2021, 12.30pm – 2pm The Quay, 31 Quayside, Whangarei, Northland Proudly sponsored by MAS Learn More

Book Here

events@adls.org.nz

adls.org.nz

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adls.org.nz/cpd

cpd@adls.org.nz

09 303 5278

FEATURED CPD

FINAL NOTICE

Remedies in civil matters

EXPECTATION MISREPRESENTATION DAMAGES

Seminar CPD 1.5 hrs Tue, 15 Jun, 4pm – 5.30pm Presenters Suzanne Robertson QC, Bankside Chambers and Peter Wright, barrister, Shortland Chambers

Cases are often won on liability but lost on remedy. A sound knowledge of the available remedies in civil matters and the general principles guiding the courts in assessing the appropriate relief is critical. Clients are less interested in the cause of action than in the result. The first in a two-part series on remedies, this seminar discusses expectation damages and damages for claims of misrepresentation under the Fair Trading Act, Contract and Commercial Law Act and in tort.

IN PERSON

The AML/CFT Workshop 2021 (Auckland)

Workshop CPD 2 hrs Wed, 23 Jun, 2pm – 4pm Facilitator Fiona Hall, barrister and solicitor

LIVE STREAM

Another year under the belt and first audits are tucked away. But compliance requires ongoing review: there’s no room for complacency. In particular, you must address any issues raised in your audit and keep up-to-date with supervisor expectations and legislative changes.

ANTI-MONEY LAUNDERING COMPLIANCE COMPLACENCY

FIND OUT MORE

How technology will change legal practice TECHNOLOGY COVID-19 LEGAL PRACTICE

Webinar CPD 1.5 hrs Tue, 22 Jun, 12pm – 1.30pm Presenter Matt Bartlett, research fellow, Faculty of Law, University of Auckland and New Zealand Centre for ICT Law

A major consequence of Covid-19 has been the forced adoption of technology by legal professionals, firms and the courts. Across the sector, technology is now ubiquitous and it’s time for lawyers to take stock. Learn about the trends in law and technology in overseas jurisdictions and analyse the potential implications for New Zealand.

FIND OUT MORE 16

Jun 11 2021 Issue 18

CPD IN BRIEF

Name suppression

Seminar CPD 1.75 hrs Tue, 22 Jun 4pm – 6pm Presenters Bruce Gray QC and Rachael Reed QC

Name suppression: privacy, reputation and fair trial Referencing recent case law in New Zealand and overseas, the presenters will address the statutory and tortious framework, strategic considerations and the unenviable balancing act required. Designed for those practising in criminal law and civil litigation.

IN PERSON

Auckland Unitary Plan

Seminar CPD 1.5 hrs Thu, 24 Jun 4pm – 5.30pm Presenters Phill Reid, Corina Faesenkloet and Stephanie Harris

LIVE STREAM

The Auckland Unitary Plan is designed to help Auckland meet its economic and housing needs. This seminar will help you understand its impact for your clients and how to engage with Auckland Council and work with the plan. The session will update general practitioners and nonspecialists on where the plan is at and what’s ahead.

Chair His Honour Judge Kirkpatrick, Principal Environment Judge IN PERSON

Memory expert evidence

Seminar CPD 2 hrs Tue, 29 Jun 4.30pm – 6.45pm Presenters Rob Harrison, barrister, Inangahua Chambers and Dr Rachel Zajac, expert witness and Professor of Psychology, University of Otago | Te Whare Wānanga o Otāgo

Cases can turn on memory, so understanding the science and how it works, and when to engage an expert are vital. This seminar will help you to understand this complex and key area of the law.

Chair His Honour Judge David Sharp

IN PERSON

Conducting effective client interviews

Workshop CPD 3 hrs Thu, 1 Jul 2pm – 5.15pm Presenters/Facilitators Dr Stephanie Mead, barrister sole, and instructor, Institute of Professional Legal Studies and Seung Youn, lawyer, Public Defence Service

LIVE STREAM

LIVE STREAM

Most lawyer-client relationships begin with an interview. Among other things, it is an opportunity to identify who the client is and to understand the nature of the services required. Mistakes made during the initial interview can have a lasting impact and even hinder a lawyer’s ability to provide effective representation.

FIND OUT MORE

Bright-line: Coming into the Light Tuesday 3 August | Webinar | 1 CPD hour Visit adls.org.nz for more information.

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WILL INQUIRIES Please refer to deeds clerk. Please check your records and advise ADLS if you hold a will or testamentary disposition for any of the following people. If you do not reply within three weeks it will be assumed you do not hold or have never held such a document.

LawNEWS: The no-hassle way to source missing wills for $80.50 (GST Included) reception@adls.org.nz DX CP24001, Auckland 1140

ADLS, PO Box 58, Shortland Street, Fax: (09) 309 3726

( 09) 303 5270

GANICZ Endre

POOLEY Lillian Josephine

• Born in Hungary, Late of Auckland, • Aged 89 / Died 13’12’20

• Late of 507/131 Wattle Farm Road, Wattle Downs, Auckland • Retired • Aged 95 / Died 12’05’21

ITO Mitsuyoshi,

NEW BOOK

To Be Fair – Confessions of a District Court Judge Author Rosemary Riddell Retired judge Rosemary Riddell shares her reminiscences of life on the bench, complete with its humour, frustrations and poignant moments. A unique glimpse into a world most of us can only imagine, her story is a fascinating commentary on New Zealand life from the point of view of a woman at the top levels of our justice system.

Price $34.77 plus GST* Price for ADLS members $31.29 plus GST* (* + Postage and packaging) To purchase this book, please visit adls.org.nz; alternatively, contact the ADLS bookstore by phone: (09) 306 5740, fax: (09) 306 5741 or email: thestore@adls.org.nz.

PRITCHARD Hinemoa Vaioge

• Late of Gifu, Japan • Married, Retired, • Aged 75 / Died 28’05’19

• Late of Auckland • Aged 84 / Died 07’04’21

MAKITAE Rere Ua Tau Mauri

ROGERS Joseph Alfred

• Late of Auckland • Kitchen Hand • Aged 62 / Died 25’02’21

• Late of 101A Peria Road, Kaitaia • Unemployed Labourer • Aged 53 / Died 18’04’20

Chancery Chambers office for rent

MENZIES Ronald Haydon • Late of 182 Don Buck Road, Massey, Auckland • Fisherman • Aged 67 / Died on or about 22’11’20

An office is available in the heritage Chancery Chambers building on the corner of Chancery and O’Connell Streets.

The office is 33.71sqm and is located on the third floor of the O’Connell Street side of the building.

Opex includes reception to greet clients/receive couriers, kitchen facilities, copy room access and use of shared meeting rooms.

Please contact Krystal Marshall on (09) 303 5277 or krystal.marshall@adls.org.nz for more information

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Jun 11 2021 Issue 18

NEW TITLE: Land Registration and Title

BARRISTERS CHAMBERS

Security in the Digital Age –

There is currently a room available in well appointed, fully serviced, central city Chambers. Vulcan Chambers was established in 1982 and occupies 2 levels in a heritage building in Vulcan Lane.

New Horizons for Torrens (Routledge, 2020)

This would suit someone with an established practice who wishes to join a longstanding Chambers. Or someone wishing to build on their existing practice with the added opportunity to work on significant criminal trials.

EDITORS: David Grinlinton and Rod Thomas

Vulcan Chambers offers a collegial environment with senior members of the Criminal Bar and experienced staff.

This book examines the modernisation and automation of Torrens land registration, with a particular focus on the reforms implemented by the New Zealand Land Transfer Act 2017. It includes contributions from leading experts – including practitioners, judges and academics from New Zealand, Australia and other relevant jurisdictions. In reviewing the book, Dr Don McMorland has written: “this is a valuable book of almost 400 pages which should be in every law library of the courts, the law society and the universities, and in the libraries of every set of barristers’ chambers”

For more information please contact Andrew Speed Phone (09) 379 8330 or email speed.law@xtra.co.nz

Lawyer – Minimum 5-6 Years’ PQE – Katikati Are you a lawyer with 5+ years of experience as a general practitioner seeking a partnership in the next 2 years? Do you have a background in property, relationship property, trust, commercial and estate law?

Anderson Law is a well-established small law firm specialising in property law with room for growth in other areas looking for someone to join our friendly team. Walk into a great long-term client base ready for you to get started.

ADLS members price $294.26 Price: Hardback $376.80; E-book$66.59 More information here

If this sounds like the job for you, please forward your application by email to neil@andersonlawoffice.co.nz

Running an Effective Jury Trial Saturday 18 September | 9.00am - 5.30pm Jury trials require a specific set of advocacy skills. Given the serious nature of cases heard in a jury trial setting, ‘getting it wrong’ can have significant implications for the accused – and for defence counsel. Aptitude in preparation and presentation is key.

T 09 303 5278

E cpd@adls.org.nz

W adls.org.nz/cpd

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Bookstore A convenient, one-stop-shop for all your legal resources ADLS members, including student members, receive a 10% discount

Visit the online bookstore:

adls.org.nz/bookstore Phone:

09 303 5270 Email:

thestore@adls.org.nz

The ADLS Bookstore couriers nationwide.

Or, browse in person at: The ADLS Bookstore Ground Floor Chancery Chambers 2 Chancery Street Auckland CBD

Cross-Examination Workshop Saturday 28 August | 9.00am - 1.15pm Cross-Examination can make or break your case. In this learn-by-doing workshop, you will get to test your cross-examination skills and get individualised feedback from experienced practitioners in the field and members of the judiciary. Refine your cross-examination skills to increase your confidence and competitive edge.

T 09 303 5278

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E cpd@adls.org.nz

W adls.org.nz/cpd