LawNews - Issue 35

NEWS Oct 8, 2021 Issue 35

Inside ■ COVID-19

The tyranny of experts P03-05

■ RENT RELIEF

ADLS challenges Justice Minister Kris Faafoi P13

adls.org.nz

A pandemic

OF EXPERTS

Contents 03-05

A pandemic of experts

COVID-19 VACCINATION MODELLING

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

06-07

Our new property tax laws: the fine print

BRIGHTLINE NEW BUILD TAX

Editor: Jenni McManus Publisher: ADLS Editorial and contributor enquiries to: Jenni McManus 021 971 598 Jenni.Mcmanus@adls.org.nz Advertising enquiries to: Darrell Denney 021 936 858 Darrell.Denney@adls.org.nz

13 COVID-19 PROPERTY LEASES

ADLS challenges Justice Minister over ‘anecdotal evidence’

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06-07

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10-11 FEATURED CPD

Photo: Bogdanhoda / Getty Images

12 CPD IN BRIEF

If you’re transferring property into a trust, timing will be critical

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Cover: Karl Tapales / Getty Images

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Oct 8 2021 Issue 35

OPINION

An epidemic of experts: time for their tyranny to end The limits of scientific knowledge have been demonstrated during this epidemic by the unreliable forecasts of modellers and epidemiologists Warren Pyke “There are few more obsessive fanatics than the technocrat who is convinced that he is reordering an imperfect world for its own good.” Lord Sumption A central idea of the 18th-century enlightenment was that to better the lot of humanity, it was essential to improve our knowledge of the world, a premise that is widely accepted in the modern world. The power of scientific discovery has given rise to technologies that a few generations ago would have seemed to be the product of wizardry.

It is therefore understandable that people view science and scientists with a degree of awe and deference. Scientific achievements, impressive as they are, shroud a reality as to the limits of scientific knowledge. As the current epidemic shows, even a life-form as simple as an RNA virus holds many surprises.

The limits of scientific knowledge have been demonstrated during this epidemic by the unreliable forecasts of modellers and epidemiologists.

It appears that politicians have learned little from the dubious prognostications of modellers. Modelling is a tool for scientific research; it is used primarily to understand complex systems.

Scientists tell good models from bad ones by statistical methods that are hard to communicate without equations: these methods depend on the type of model, the amount of data and the field of research.

Politicians are unlikely to understand modelling. It follows that modelling should not be used for predictive purposes in a pandemic and it should only inform, not dictate, public health measures. Modellers projecting huge death tolls from a novel viral disease should be very careful not to overstate the usefulness of their work.

The measures taken to date in this pandemic have been a moving feast. First, it was lockdowns to ‘flatten the curve’; then

Warren Pyke

Modelling should not be used for predictive purposes in a pandemic, and it should only inform, not dictate, public health measures

it was lockdowns to achieve ‘elimination’ and some promoted a utopian ‘zero covid’ world, presumably relying on vaccines as our salvation. All of these theories supposed the coronavirus would stand still and not do what such viruses do, rapidly mutate.

As to the role of vaccines, there is no reason to believe mandatory mass vaccination will of itself end the pandemic.

Uncontested evidence was recently given by the DirectorGeneral of Health before the High Court that there was “growing scientific evidence and consensus that the Pfizer vaccine is effective in reducing the rate of transmission of covid-19” and of the “efficacy of vaccinations on reducing the spread and harm of covid-19” (my italicised emphasis; see GF v Minister of Covid-19 Response [2021] NZHC 2526 at [80], [86] and repeated in more detail at [91]).

However, contra Dr Bloomfield, while covid vaccines prime the body’s immune system to respond to the invader, these vaccines are not ‘sterilising’ (see interview with Professor Carl Heneghan, Oxford Professor of Evidence-Based Medicine).

While such vaccines may materially reduce the severity of disease in some people, recent evidence from Israel is showing the vaccines are not durable and the double vaccinated (in the case of the Pfizer vaccine) require a booster after 180 days; see inter alia Griffin S. 2021, Covid-19: Fully vaccinated people can carry as much delta virus as unvaccinated people, data indicate.

BMJ 374:2074: http://dx.doi.org/10.1136/bmj.n2074; published 19 August 2021.

Fundamental objection Mass vaccination depends on achieving a high uptake. Ninety percent has been suggested for New Zealand. While observing that a high level of vaccination has not worked in Israel or other countries to stave off the Delta variant, a more fundamental objection to this policy arises.

Cogent reasons can exist for those with risk factors (age, health, prior covid status, susceptibility to known side effects) to decide against vaccination. The sovereignty of the individual over personal health decisions is near to absolute (there is a recognised exception for the severely mentally disordered).

Section 92I of the Health Act 1956 unambiguously states: “In no case may a direction require an individual to submit to

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compulsory treatment.” The individual’s right to bodily integrity and to choose what they do with their body underlies the right to refuse medical treatment (see s 11 of the New Zealand Bill of Rights Act 1990).

This right was concisely restated by the late Justice Stephen Reinhardt, in the context of physician-assisted death: “[B]y permitting the individual to exercise the right to choose we are following the constitutional mandate to take such decisions out of the hands of the government, both state and federal, and to put them where they rightly belong, in the hands of the people. We are allowing individuals to make the decisions that so profoundly affect their very existence – and precluding the state from intruding excessively into that critical realm.” (Compassion in Dying v Washington, 79 F.3d 790 (9th Cir. 1996)).

Moreover, if health authorities extend their coercive reach to exclude parents from having input into the vaccination of their children, governments will risk causing damage to the traditional autonomy of family and whānau. Such government and official intervention in the life of families and whānau runs counter to s 6 of the Care of Children Act 2004: it is iniquitous, particularly given the real if infrequent risk of side effects to children (see the ignored advice of the Joint Council on Vaccination and Immunisation in the UK, that the benefits were outweighed by the risks for 12-15-year-olds, currently the subject of an application for judicial review in England, reported in The Daily Express on 20 September 2021. The JCVI’s advice is available on the Public Health England website). Children overwhelming are hardly affected by the virus and it is doubtful that vaccinating children will contribute much to population immunity.

The plan As to the future, it does not have to be bleak, since government ministers have clear guidance at their fingertips. The uncertainties about containment of respiratory viruses informed the carefully devised Ministry of Health Influenza Pandemic Management Plan 2017. The introduction to that plan states: “The NZIPAP focuses on pandemic influenza. However, the approach in the plan could reasonably apply to other respiratorytype pandemics (such as severe acute respiratory syndrome – Sars).”

The plan emphasises voluntary measures, opting for a mixture of containment through voluntary isolation of the sick or 04

Children overwhelming are hardly affected by the virus and it is doubtful that vaccinating children will contribute much to population immunity

infectious, some mandatory non-pharmaceutical measures (such as restrictions on public gatherings and closure of schools) and deploying vaccines and available treatments with informed consent, where available (the complexities associated with rolling out vaccines in a pandemic are discussed at pages 131 and 132 of the plan).

The plan makes no express provision for nationwide stayat-home orders, nor does it recommend mandatory vaccination (nor does the Health Act 1956. It is quite to the contrary, as noted above). The language of advice and guidance in the plan accords with the public health philosophy underlying Part 3A of the Health Act (see in particular ss 92C and 92D which require ‘respect for the individual’ and ‘voluntary compliance’.

The autonomy of the individual lies at the heart of liberal democracy. It stands against the overbearing power of the State and oppression by a majority; it is essential to individual wellbeing and to a peaceful and free society.

Individual autonomy is not just about the particular person and his or her choices; it is about the type of society we want to live in. Do we want a society of bullies and snitches, where neighbours are invited to report on each other for infractions of the latest set of mandatory rules, where police chase people away from perfectly safe public spaces and can enter and search your home for one-too-many visitors? Or do we want a society where people respect each other’s rights and autonomy and cooperate to shared ends?

Covid expert-driven, mandated measures run roughshod over individual autonomy and will lead us to a wasteland if they persist. F A Hayek describes it in these terms (from The Road to Serfdom): “It is true that the virtues which are less esteemed and practised now – independence, self-reliance, and the willingness to bear risks, the readiness to back one’s own conviction against a majority, and the willingness to voluntary cooperation with one’s neighbours are essentially those on which an individualist society rests. Collectivism has nothing to put in their place, and insofar as it already has destroyed them it has left a void filled by nothing but the demand for obedience and the compulsion of the individual to what is collectively decided to be good.”

This danger was echoed by Lord Sumption, in his UnHerd interview, when, putting his historian’s hat on, he observed: “[Thomas] Hobbes believed in the absolute state – it didn’t

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Oct 8 2021

Photo: Phil Walter / Getty Images

Issue 35

Continued from page 04 have to be a monarchy, but it had to be absolute. He said that there was nothing short of the state actually killing people that the state should not be entitled to do. He was not, let us say, a believer in liberty. This is because of his experience of the anarchy which flowed from the civil war in England. Hobbes believed that we resign our freedoms unconditionally and permanently into the hands of the state, in return for security. Now, this is a model which ever since the rise of a recognisable form of modern Liberalism in the middle of the 19th century, has been almost universally rejected. But we have tended to revert to it during the current crisis. And I think that that is a very striking and very sinister development.”

Lord Sumption has also rightly lamented the tyranny of certain covid experts in promoting these types of measures (see Tyranny of the covid experts: Finger-wagging SAGE scientist Jeremy Farrar penned a book about how he’s the only person Boris Johnson should ever have listened to).

Arrogance and assumptions I have detected this assumption of infallibility in certain local experts who criticise the government for not making lockdowns

Almost as troubling is that certain of these covid experts have shown little humility or readiness to admit error

longer or restrictions tighter, usually adding predictions of worse to come if their way is not taken. Almost as troubling is that certain of these covid experts have shown little humility or readiness to admit error.

Some have stoked unfounded fear by making predictions of numberless deaths and hospitalisations, without reference to the fact that the virus causes disease mainly in the elderly and in those with comorbidities; that it generally poses little more danger than a seasonal cold does to the young or healthy people aged under 50.

Few of these ‘mainstream’ covid experts have sought to put this epidemic in its correct historical perspective: it is nothing like the plague which killed whole communities, including babies and children, and it is nothing like as deadly as the 1918 flu. It is relatively (given demographic differences) on a par with other influenza pandemics over the past century.

Eminent experts who give different advice, based on evidence and orthodox public health principles, such as Professors Carl Heneghan, Sunetra Gupta (Oxford University) and Jay Bhattacharya (Stanford University), have been risibly ‘fact checked’ by nameless nerks and disgracefully vilified in social and some mainstream media.

The deliberate snuffing out of scientific debate is antithetical to real science and to the principles of liberal democracy alike.

Civilised discourse needs to be revived.

This pandemic is far from over. Politicians and public health authorities will hopefully seek to co-opt, not coerce. Because it is individual decisions and actions which will matter in this farfrom-over crisis.

People need to be able to make a living, feed their families and have something to hope for, beyond waiting for yet another lockdown or for the latest vaccine or drug to magically end the pandemic. This epidemic will end in New Zealand when the population acquires robust, widespread immunity and the virus becomes endemic.

What government and health officials should stop doing is pushing people around; people must be permitted to take responsibility for their own health decisions. What is needed is a holistic public health strategy which respects individual autonomy, seeks to protect the vulnerable, adequately treats the sick and sustains the social and economic fabric of the country. ■ Warren Pyke is an Auckland barrister. These opinions are his own and do not necessarily reflect those of ADLS ■

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TAX/PROPERTY

How the govt’s

new property tax rules will work

Because roll-over relief will be available only for transfers to family trusts from 1 April 2022, transferring an impacted residential property to a family trust right now could have significant adverse tax consequences

Bevan Miles, David Patterson & Robert Grignon

Photo: Nazar Abbas Photography / Getty Images

Draft legislation, in the form of a Supplementary Order Paper (SOP) to the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill, has been released to implement the new tax treatment package for residential property.

It is scheduled to come into effect on 1 October this year.

A large number of changes are proposed, most of which have been well-signalled, but there is still a lot to unpack.

The SOP will be referred to the Finance and Expenditure Select Committee (FEC), which the ministerial press statement says is expected to call for public submissions. The FEC’s report is due by 23 March 2022 with the bill expected to be enacted no later than 31 March 2022.

Key points Interest deductibility ■ The rules will fully deny income tax deductions for interest

on borrowing in relation to residential property acquired from 27 March 2021 and will be phased in for residential property acquired before that date, subject to certain exemptions summarised below.

■ Interest will remain fully deductible in relation to ‘new builds’.

■ To qualify as a new build, the property generally has to have received its code compliance certificate (CCC) on or after 27 March 2020. A property that received its CCC up to one year before the rules were announced (on 27 March 2021) can therefore have preferential new build status.

■ The new build exemption runs for 20 years from the date the CCC is issued and transfers with the property – ie, successive owners also get the benefit of interest deductions (subject to normal rules governing deductibility).

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■ Build-to-rent schemes should generally be unaffected

during the development phase and for 20 years following completion given the land development business exemption, development land exemption and new build exemption (discussed below).

■ Similarly, developers should generally be unaffected given the land development business exemption and development land exemption.

■ For companies that are not ‘close companies’, the limitation rules should not apply if the value of impacted property is below 50% of the value of all company assets.

■ Conversions of commercial property into self-contained

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Conversions of commercial property into selfcontained residences should constitute new builds

Oct 8 2021 Issue 35

Continued from page 04

residences should constitute new builds, as well as subdivisions where the housing stock is being increased.

■ Interest deductions that have been denied under the rules can be claimed against taxable income on sale of the property (if the sale is subject to tax). For example, if an investor buys a non-new build rental property in 2022 and sells that property in 2026, they will be unable to deduct their interest expense when incurred, but can claim a deduction for the full amount (incurred between 2022 and 2026) against their taxable income under the brightline test in 2026 when the property is sold. In effect, interest deductions are just deferred rather than denied if a sale is taxable.

Taxation of gains on sale ■ A shorter five-year brightline test (rather than the current

10-year test) will apply for new builds acquired on or after 27 March 2021. The five-year test is available only where the property is a new build acquired within 12 months of the CCC being issued. If acquired 12 months after the CCC is issued, the normal 10-year brightline test will apply.

Roll-over relief ■ Roll-over relief will be available from 1 April 2022 for

certain transfers between related parties, including to most family trusts, partnerships, look-through companies, Māori authorities, and as part of a settlement claim under the Treaty of Waitangi. This is in addition to the roll-over relief already available for relationship property settlements and amalgamations, and full relief for transfers on death.

■ Roll-over relief will treat the transferee as having acquired the property on the date (and for the cost) that the transferor originally acquired it for both the bright-line test and the phase-out of interest deductibility. There is no roll-over relief for transfers out of a trust (only in), or for transfers between family members (eg, parents gifting an interest in residential property to children).

Key dates and phase-out rules The general proposal is that from 1 October, interest will not be deductible for residential property acquired on or after 27 March 2021. This rule is subject to various exemptions for new builds, development properties, certain entity types, etc, as discussed below.

For properties acquired before 27 March, the ability to deduct interest is being phased out between 1 October 2021 and 31 March 2025. Seventy-five percent of the interest expense will be deductible between 1 October 2021 and 31 March 2023; 50% deductible from 1 April 2023 to 31 March 2024; and 25% deductible from 1 April 2024 to 31 March 2025.

For properties acquired before 27 March, the phase-out

rules will still apply to loans that are refinanced, but only up to the level of the original loan amount that qualified for the phase-out.

There is some roll-over relief for properties acquired before 27 March but subsequently transferred to associated persons, for example transferred to a family trust. That property will still be treated as having been acquired before 27 March and will be eligible for deductions under the phaseout rules.

Similar relief is available for properties transferred under relationship property settlements and transfers on death (ie, these do not re-set the effective acquisition date for purposes of phase-out eligibility).

Bevan Miles

New build and property development exemptions New builds of residential properties are exempt where a new build is generally a residence that receives a Code Compliance Certificate (CCC) on or after 27 March 2020.

Notably, new builds will remain exempt for 20 years from the date the CCC is issued and the exemption transfers with the property to anyone who owns that property during the 20-year period. Residential properties completed from 27 March 2020 onward, therefore, have special status and will no doubt be preferred by investors relative to housing stock that existed before 27 March 2020.

Conversions of existing dwellings into multiple dwellings and of commercial buildings converted into residential dwellings can also qualify as new builds.

Prior to the CCC being issued, the property should also be exempt if the owner holds the land: ■ as part of a development, subdivision or land-dealing business or a business of erecting buildings on land (the ‘land business exemption’); or ■ to develop, subdivide or build on in order to create a new build (the ‘development exemption’) even though the owner is not in the business of developing land.

Interest incurred in relation to remediation work will typically not be deductible unless the work is significant enough for the property to constitute a new build once the remediation work is completed.

This does not mean property developers are automatically fully exempt, although in practice the rules are unlikely to have a material impact given the land business exemption and the development exemption. The 50% threshold for companies (other than close companies) discussed below also means many corporate developers may be exempt from the rules.

David Patterson

Robert Grignon

Entities affected The rules will not apply to most widely-held companies holding residential property that is incidental to their

Continued on page 14 07

Photo: James D. Morgan / Getty Images

COVID-19

Australia’s reopening plan: a big step towards living with covid Random checks by police or ADF personnel have proven home quarantine and isolation have high levels of compliance

Catherine Bennett “Australia will be ready for take-off very soon,” said Prime Minister Scott Morrison late last week as he announced the ban on international travel would be lifted sometime next month.

Returning Australian citizens and permanent residents will be able to quarantine at home for seven days if fully vaccinated with a TGA-approved vaccine.

The recognised vaccines include those already approved for use in Australia by Pfizer, AstraZeneca, Moderna and Johnson and Johnson/Janssen, as well as Sinovac and Covishield (Covishield is AstraZeneca’s vaccine made in India).

Unvaccinated returnees will still need to enter managed hotel quarantine for 14 days until Australia moves beyond phase C of the national plan.

Those who can’t be vaccinated, including young children and those with a medical exemption, will be counted as vaccinated for travel. Arrival caps will also be abolished for fully vaccinated returnees.

The announcement is one big step towards allowing vaccinated Australians to return home soon, as we move to a future that somewhat resembles pre-covid life.

Is seven days enough?

Home quarantine trials in South Australia and New South Wales will answer this question. Authorities will be testing returnees and the proportion of those who are covid-positive, and when they test positive, will inform decision-making. This will be monitored on an ongoing basis once we open up and can be 08

adjusted if it turns out a higher-than-acceptable number of travellers test positive between day seven and 14.

Currently, NSW data tell us less than half of 1% of returnees in hotel quarantine are testing positive. The NSW surveillance report from August 21 shows only 4% of those positive cases were fully vaccinated.

The low percentage of returnees who are positive will matter less as Australia progressively moves towards ‘living with covid’ with a background rate of the virus in the community.

We know fully vaccinated people can still get infected, but at much lower rates. There’s also mounting evidence suggesting their infectious period is shorter than unvaccinated people, so they’re less likely to pass the virus on. Importantly, there’s now a better than 70% reduction in risk of having a serious infection requiring hospitalisation in all of the vaccines the TGA has recognised for international arrivals.

Ensuring people stay home South Australia is trialling an app that uses geo-tagged facial recognition software to ensure people stay home during quarantine.

If this app proves successful it might be rolled out across Australia.

It might also include supports for other aspects of compliance, such as prompts to get tested, a checklist of symptoms and other ways to check in with returnees.

Random checks by police or ADF personnel have proven home quarantine and isolation have high levels of compliance.

Something similar could also be brought in at some point if there were compliance concerns.

One thing that’s more difficult to monitor is whether other people come into the house of a person who is meant to be isolating. The risk of transmission to the visitor is much higher than if the returnee ventured out. But this is the same risk we currently have with isolating close contacts locally.

Ultimately the system will need to rely, in part, on trust. We know Australians are generally very compliant, and many people will be desperate to travel again and reunite with family and friends. The majority are likely to comply with the requirements to facilitate keeping travel open.

The system will be safe enough – and that’s all we need going forward.

Other household members One question yet to be answered is whether everyone else in the house has to quarantine if housing a returned traveller.

With the risk of a fully vaccinated returnee being positive very low, so too is the risk to the household. If they do return a positive test on one of their test days, their household members may also be required to quarantine. Rapid antigen tests might be useful for early detection of infection in these cases.

Another question is whether we will still have offshore

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Oct 8 2021 Issue 35

It’s about managing risk and being much more selective about identifying who’s at risk in a highly vaccinated population

Continued from page 08

screening, requiring a negative test prior to departure for Australia?

The finer details will emerge and probably change over time as we collect data and manage changing risks. We’ll probably start conservatively and then gradually open things up more and more as we learn which components of risk mitigation are proportionate.

Which states go first?

International travel will open to states and territories gradually as they reach 80% of over-16s fully vaccinated. So we won’t have to wait until all jurisdictions have individually hit the threshold.

Based on vaccination uptake rates, the ACT and NSW will likely be the first to open, followed by Victoria.

Tasmania is still tracking well but other states are lagging behind. Queensland and Western Australia will probably be the last to open their borders.

This is broadly in line with the national plan, but is coming probably a month or two earlier than looked possible in June.

Vaccination rates, particularly in NSW, Victoria and the ACT, have been spurred on by significant covid outbreaks. States are also assessing the distribution of vaccine coverage to ensure there are no parts of the community left behind by the time of opening.

Travel bubbles The Prime Minister flagged potential bubble arrangements with countries like New Zealand where there’d be no quarantine requirements. The list of such countries will likely change over time, depending on circulating variants and country risk profiles.

We’re probably heading in the direction of eventually not requiring quarantine for returnees at all, only testing. For now, it’s clear we’re moving towards a system that manages risks rather than operating with zero risk tolerance.

Contact tracers As fully vaccinated people contribute less to transmission and are at less risk of severe covid-19 symptoms, all states and territories will progressively shift the risk settings that underpin contact tracing. We have used comprehensive contact tracing, casting the epidemiological net wide to ensure not one contact of a case who might have contracted the virus was missed.

The chance of someone being positive drops away the more casual the exposure. Once we no longer have to be fearful of missing even just one case, we can make the net smaller and just trace the people at highest risk.

We might reach a stage where even close contacts just have to get a test, without having to quarantine.

This shift brings with it some risk of cases to the community but we’re likely to have an ongoing, even if low, level of cases in the community. A low rate of introduction across international borders will not materially add to that. It’s about managing risk and being much more selective about identifying who’s at risk in a highly vaccinated population.

New variants Watching what variants are circulating will be a priority and some border rules changes might be needed if new risks are identified. For example, stricter arrangements for people arriving from high-risk areas where a particularly worrisome variant has emerged.

The system can be adapted for changing risks. More transmissible variants might emerge but we might also start using next-generation covid vaccines which are a better fit for variants and precautions can be dialled down.

Being highly vaccinated allows Australia to move away from the ultra-conservative ways we’ve had to manage the pandemic and allows us to start reopening to the world. ■ Catherine Bennett is the inaugural chair in epidemiology at Deakin University ■ The above was first published in The Conversation and is republished with permission

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FEATURED CPD

Navigating defective building litigation LIABILITY CLAIM DEFECTS

In Person | Live Stream 2 CPD hrs Tuesday 19 October 4pm – 6.15pm Presenters Andrew Hough; Michael Thornton; Shyrelle Mitchell and Kiri Harkess Chair Geoff Hardy, partner, Martelli McKegg IN PERSON

Limitation: a map for the minefield

New Zealand’s building boom over the decades has generated a multitude of claims over poor workmanship. Buildings that remain unrepaired, or are the subject of faulty remedial work, nevertheless continue to be bought and sold.

This seminar provides a guide to navigating defective building disputes (from the perspectives of both counsel for plaintiff and defendant) having regard to current issues, and in the context of recent and key case law.

LIVE STREAM

Webinar 1.25 CPD hrs Tuesday 26 October 1pm – 2.15pm Presenters Philippa Fee, partner, Fee Langstone and Tim Rainey, barrister, FortyEight Shortland

This webinar will provide a map for the limitation minefield: discussing the key aspects of limitation law from the Limitation Act 2010 and elsewhere, which can trip up even the most seasoned litigators.

LEGISLATION APPLICATION ISSUES

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Understanding the overseas investment rules REFORMS NATIONAL SECURITY INTERACTION

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Webinar 1.5 hrs Thursday 28 October 1pm – 2.30pm Presenters Pedro Morgan – lead advisor; Paul Wrigley – manager, Monitoring and Intelligence and Andre Baldock – senior investigator (All from the Overseas Investment Office)

This session will cover: An overview of the overseas investment regime and the reforms.

The national security and public order notification regime.

How legal professionals can interact with the Overseas Investment Office and the regime.

It will be of interest to property lawyers, commercial lawyers, general practitioners and immigration lawyers and advisors.

FIND OUT MORE

Oct 8 2021 Issue 35

adls.org.nz/cpd

Leading your career Wellington

Workshop 8 hrs Thursday 28 October 8.45am – 5pm Facilitators Miriam Dean QC and Liz Riversdale, Catapult

LEADERSHIP CONFIDENCE REPUTATION

cpd@adls.org.nz

09 303 5278

Exclusively for women lawyers with 6+ years’ PQE. Take charge of your career and realise your underlying potential. This practical, interactive one-day workshop, led by one of New Zealand’s top QCs and one of New Zealand’s senior leadership experts, will arm you with resources, self-confidence and focus to apply immediately to your role and to enhance your future career.

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‘Court’ by forensics HANDS-ON INTERACTIVE INSIGHTS

Workshop 4 hrs Saturday 30 October 9am – 1.15pm Presenters Tom Coyle, managing director, Forensic Insight Ltd and Allie Coyle, director, Forensic Insight Ltd

Forensics never goes away. It’s everywhere and every contact leaves a trace.

This workshop will take you behind the scenes as a crime scene investigator, so you get a greater understanding of what type of evidence is preserved from the scene and used effectively in court. Understand the importance of chain of evidence and get an insight into how to deal with expert forensic witnesses.

Numbers strictly limited

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Valuation disputes in family property cases

Webinar 1 hr Wednesday 3 November 12pm – 1pm Presenter Marnus Beylefeld, director, Sapere Forensic & Valuation Chair Brian Carter, barrister, Bastion Chambers

Presented by an expert in valuation, litigation support and forensic accounting, and with commentary from a family law barrister, this webinar will provide insights into basic valuation theory, principles and methodologies, and its application to family property law.

VALUATION PRINCIPLES METHODOLOGY

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CPD IN BRIEF

Medically assisted dying

In Person | Live Stream 2 CPD hrs Wednesday 20 October 2pm – 4pm Presenters Grant Illingworth QC; Richard McLeod; Dr Jeanne Snelling and Dr Jane Casey

The End of Life Choice Act 2019 comes into force on 6 November 2021.

Hear from our panel of lawyers, academics and a psychogeriatrician who will unpack the Act and the corresponding process, offer insights into its implementation, consider capacity and other clinical challenges, and outline some of the uncertainties, red flags and thorny issues.

Chair Professor Kate Diesfeld, Professor of Law, AUT and Chair, AUT Ethics Committee

IN PERSON

Burning Issues Forum 2021

Forum 2 hrs Tuesday 9 November 4pm – 6pm Presenters Philip Skelton QC; Mere King; Liz Coats; Shelley Kopu and Rosemary Wooders

LIVE STREAM

Cast aside your scarf and hat and warm yourself at the boiling vat that is the Burning Issues Forum 2021. Come see the flickering fangs of orange torch the scorching cauldron’s bottom! Legislation, reinstatement, tikanga and name suppression are some of the scalding hot topics that will be served, crackling and steaming, at this, our annual inferno.

Chair Rachael Judge, senior associate, Simpson Grierson

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Towards sustainability: the role of the law firm

Fitness to stand trial: a practical guide

In Person | Live Stream 2 hrs Tuesday 16 November 4pm – 6.15pm Presenters Debra Dorrington; Garth Sinclair; Nicole Xanthopol; Mary Heath and Hugo Miller

Live Stream | Seminar 2 hrs Thursday 11 November 4pm – 6.15pm Presenters The Honourable Justice Collins; Her Honour Judge Ryan; Ish Jayanandan; Dr Jeremy Skipworth; Sally Kedge and Dr Kelly Howard

A thriving, resilient, safe and ultimately sustainable world is an enticing prospect. It’s also an imperative. What responsibilities do lawyers and law firms have to help bring about that future?

This session is aimed at all legal professionals, particularly partners/ principals, directors and practice/office managers in small to medium sized firms, and barristers.

IN PERSON

A practical guide to approaching fitness issues: Can you determine when fitness to plead might need to be considered? If you think it might be an issue, do you know what to do and what reports to get? How does the psychiatric report relate to the communication assistant assessment? Do you always need to do both? Which do you do first? What do you do with the reports?

How does the specialist CP(MIP) court work? This seminar will address these and many other questions in this key area.

LIVE STREAM

Class and Funded Litigation: Knowing your Professional Obligations Wednesday 17 November | Seminar | 2 CPD hours Visit adls.org.nz for more information.

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LIVE STREAM

Oct 8 2021 Issue 35

PROPERTY/CONTRACT

ADLS challenges Justice Minister over non-existent policy input There were no policy discussions, anecdotal or not. The first that we knew of the proposed amendment was when we received a press release from the minister’s office on 28 September

Covid-19 Response (Management measures) Legislation Bill – the vehicle through which the Property Law Act amendment will be made.

Most contentious is Faafoi’s plan to add a provision that will override contractual arrangements for commercial leases. His proposal will require landlords and tenants to agree on a ‘fair proportion’ of rent to be paid if tenants are unable to access their Jenni McManus business premises because of covid restrictions.

Most debate has surrounded the words ‘fair proportion’, which ADLS is challenging Justice Minister Kris Faafoi to correct is not defined in Faafoi’s provision, and the more fundamental a claim made in The New Zealand Herald this week that he problem of undermining the certainty of contract. received ‘anecdotal evidence’ from ADLS last month before On 5 October, Faafoi told the Herald his announcing a controversial amendment move was based on ‘anecdotal evidence from to the Property Law Act, allowing covidADLS did not discussions and correspondence with lawyers’, affected landlords and tenants to renegotiate have any input including ADLS. commercial lease payments.

This was news to Dyhrberg. ADLS ADLS President Marie Dyhrberg QC says into the policy representatives met with ministry staff on she is disappointed. that culminated 17 September after being invited to an in“No input was requested by the ministry in the proposed confidence discussion about the ADLS Deed from ADLS and, accordingly, none was given. of Lease, which is used by many commercial There were no policy discussions, anecdotal amendment to or not. The first that we knew of the proposed the Property Law landlords and their tenants. This contains a no-access-in-emergency clause and the amendment was when we received a press Act discussion was confined to the general release from the minister’s office on 28 application of the clause in the current September. covid-19 environment.

“We are perplexed by the statement as At no time did the discussion touch on ADLS was not asked to provide input to the policy issues, Dyhrberg says, and there was no suggestion that policy, as implied. The discussions the minister is referring to did policy changes were imminent. In fact, ADLS has subsequently simply not happen.” learned that the government decided to make the amendment Over the past 10 days, Faafoi’s proposed change has drawn fire from the property industry, lawyers, commercial landlords and to the Property Law Act on 9 September –eight days before Ministry of Justice staff met with ADLS. the retail and hospitality sectors which say they were blindsided “ADLS did not have any input into the policy that culminated by the minister’s move. in the proposed amendment to the Property Law Act,” she says.

Among those caught short was ADLS’ Property Law Committee which then had to quickly draft submissions on the ■ 13

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business, provided less than 50% of the company’s total assets by value are residential properties that would otherwise be subject to these rules.

Widely-held companies exceeding the 50% threshold and companies that are ‘close companies’ (five or fewer individuals or trustees own more than 50% of the shares) will need to apply the rules to any affected properties. This may result in a denial of a portion of their interest expense. There is some complexity around how interest expenditure will be traced (or deemed to be traced) to affected properties.

Māori authorities (and companies wholly owned by Māori authorities or eligible to be Māori authorities) will be treated as widely held and subject to the 50% threshold even if they technically qualify as ‘close companies’.

Community housing providers that are not tax exempt will not be impacted to the extent their interest expenses relate to properties used for emergency, transitional, social and council housing.

Kāinga Ora and its wholly-owned subsidiaries will also be exempt from the rules.

Other properties exempt from rules In addition to new builds and development properties, certain other residential or quasi-residential types of properties are unaffected. This includes: ■ the portion of a main home used to earn income (eg, if the owner has a flatmate or boarder) ■ retirement villages and rest homes ■ hotels, motels and hostels ■ houses on farmland ■ bed and breakfasts (where the owner lives on the property) ■ employee and student accommodation ■ property used for emergency, transitional or social housing when leased to the Crown (eg, housing and

urban development or Kāinga Ora) or to a registered community housing provider (CHP) ■ land outside of New Zealand; and ■ residential land collectively owned by a Māori authority (or an entity eligible to be one) and used to provide housing to a member of the relevant iwi or hapū (papakāinga and kaumātua housing), land transferred as part of a treaty settlement and certain types of Māori land title.

Brightline test changes The SOP includes the previously announced addition of a separate five-year brightline test for new builds. For the purposes of this rule, a person is eligible only if he or she acquired the property no later than 12 months after the CCC was issued and the CCC must have been issued by the time the property is sold.

As a final and welcome change, there is proposed roll-over relief from the brightline tests (both five-year and 10-year) for transfers of property in certain related-party contexts. For example, transfers to most family trusts will no longer trigger the test and re-set the acquisition date.

Similarly, roll-over relief is available for transfers of property to partnerships and look-through companies, for the transfer of land subject to the Te Ture Whenua Māori Act 1993 and for transfers to trusts as part of settling treaty claims.

As highlighted above, this roll-over relief will be available only for transfers occurring on or after 1 April 2022. This means that there may be a significant disadvantage to transferring impacted property between now and 31 March 2022. For example, it might be disadvantageous to transfer any residential property to a family trust at the moment unless that property is used exclusively as a main home and that use is not expected to change in the next 10 years. ■ Bevan Miles and David Patterson are partners at Chapman Tripp and Robert Grignon is a senior legal advisor at the same firm ■

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Roll-over relief will be available from 1 April 2022 for certain transfers between related parties

Oct 8 2021 Issue 35

Briefs Defamation reform Australia’s Attorney-General Michaelia Cash is pushing the states to make urgent reforms to the country’s defamation laws to reverse a High Court ruling that has exposed the government and publishers to legal The High Court over third-party comments ruled last month action on social media and other digital that publishers platforms.

Cash says the current law is not fit could be liable for purpose and warns more needs to for defamatory be done to balance free speech and content posted unfiltered social media comment. on their social The High Court ruled last month that publishers could be liable for media pages defamatory content posted on their even if they were social media pages even if they were unaware of its unaware of its existence.

As a result, US broadcaster CNN existence says it will no longer publish content on its Facebook in Australia after the social media giant refused to disable the comments functionality on its platform.

Digital diagnosis Apple is experimenting with an iPhone that could detect depress and cognitive decline in users. The Wall Street Journal reports the company is using an array of sensory data that includes mobility, physical activity, sleep patterns and typing behaviour to try to determine the mental health concerns of users. From this data it hopes to develop an algorithm that can detect specific conditions. ■

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Oct 8 2021 Issue 35

Burning Issues Forum 2021 Tuesday 9 November | 4.00pm - 6.00pm Presenters: Philip Skelton QC, Bankside Chambers; Mere King, Partner, Buddle Findlay; Liz Coats, Partner, Bell Gully; Shelley Kopu, Lawyer, Shelley Kopu Law; Rosemary Wooders, Senior associate, Bell Gully Chair: Rachael Judge, Senior associate, Simpson Grierson Followed by drinks and nibbles.

T 09 303 5278

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W adls.org.nz/cpd

Evidence Law Update for Civil and Criminal Lawyers Wednesday 1 December | 4.00pm - 6.15pm Presented by two of the co-authors of the 2018 text Mahoney on Evidence: Act & Analysis, this seminar will focus on the current application of key sections of the Evidence Act 2006 in both the civil and criminal law jurisdictions.

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