ADVICE / ADVIES

These articles were first broadcast on The Protea Hour - "The Radio Voice of South Africans in Auckland" and prepared by Pieter Kruger who practices as a Solicitor with Stevenson Campbell in Browns Bay, North Shore City, New Zealand.   Pieter can be contacted by e-mail on pieter@baylaw.co.nz

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 CROSS LEASE

After immigrating to New Zealand, the most important goal of most of us is to purchase a new home.

The land transfer system in New Zealand is different from the system that we all knew in South Africa.

There are different types of ownership of land in New Zealand.

Today I am going to talk about one type namely cross leases.

Until 1958 only one house could be erected on a piece of land that has not been subdivided. The need to own your own flat led to the development of the scheme of cross leases. Essentially a cross lease is the co-ownership of the same piece of land by the occupiers or lessees of the houses that have been erected on the land.

The houses need not be attached and separate buildings can be erected on the same piece of land under the cross lease provisions.

So if you are the lessee, what is it that you are buying? When the land is subdivided by the grant of a cross lease, the owners of the flats own the land in shares. All the owners then join together in leasing the flats to themselves and the other owners.

You cannot sell your undivided share in the land unless you simultaneously alienate the lease to the new purchaser. It is therefore not possible to be an owner without being a lessee too.

A lease is normally for a period of 999 years. Each purchaser becomes the owner of an undivided share in the land with the other owners of the other flats and a leasehold owner in one particular flat.

Purchasers have two distinctive roles in the cross lease. The first one is as lessor together with the other owners to themselves and secondly as lessees of the cross lease. As individual lessee the purchaser acquires the right to the exclusive possession of the particular flat. The lessee may also lease a garage under a similar lease agreement.

The part of the property, which is not cross-leased, remains the ownership of all the flat owners as tenants in common.

The rights of the purchaser of a flat arise from the lease, which confers the right to exclusive possession of the flat.

The owner is normally referred to as lessee. The covenant in the cross lease defines the rights and obligations of the lessees as between themselves. The form of the cross lease is not prescribed and may be varied to suit the needs of the situation.

A cross lease is applicable to the outer walls of the flat. This means that the lessee leases the whole flat and not just the inside.

There are also common and restricted areas. All the lessees may use the common areas unless otherwise provided in the cross lease. Normally the common areas are only for access purposes.

The restricted areas are those areas around the flat that the lessee is leasing. This area is restricted to the other lessees and may only be used by the lessee of the flat surrounding it. This is a private area and the rights of the lessee will once again depend on the terms of the lease.

It is important that you read the cross lease carefully to ensure that you know exactly what is expected of you as lessee.

The lessee may not erect any building, structure or fence without the consent of the other lessees. These covenants are binding on subsequent purchasers. If you therefore purchase a cross lease then you will also be bound by the terms of the cross lease.

Because the flats in the cross lease are in close proximity to each other it is important that all buildings be insured against fire and other hazards for their full replacement value. It should be noted that:

These are all matters to be considered since it affects the insurance of the flat. If all the flats are in the same building it is advisable that the whole building be insured under the same policy. This will ensure that all the lessees have control over the insurance and can reinstate the building. It is desirable that any insurance taken out be in the names of all the lessees, This rule is not generally observed by lessees.

A cross lease title can be mortgaged. The mortgage will be over the lease and your share in the land.

Alterations to a flat can affect the light and air and view of the other lessees and in turn could affect the quiet enjoyment of the neighbor of his or her cross lease.

The lessee must obtain the written consent of the other lessees before any alterations can be made to the flat. 

The courts have held that a structural alteration includes the removal of an ordinary window and the installation of french doors. If the lessee makes any alterations to the building and does not have the consent of the other lessees then he or she may be ordered by the court to restore the building to its original condition. If a lessee has effected structural changes to the building then it may amount to a defect in the title of the lessee when the flat is sold.

Extensions that have not been approved may encroach on the common property and may lead to the vendor having to lodge a new flats plan and obtain the consent of the other lessees which can be a costly exercise.

The cross lease will provide for the parties not to create a nuisance or annoyance to the other lessees. The courts prefer that any disputes between the parties be referred to arbitration. The parties may also make use of alternative dispute resolution. I think that the parties should try to solve the dispute by talking to each other first. You are going to live in close proximity to each other for a long time and quarreling neighbors should not disturb the harmony of the scheme.

The lessees themselves may remedy any breach of the terms of the lease and the costs of remedying such breach may be recovered from the offending lessee.

Cross leases do not confer ownership of the flats to the exclusion of the other parties and this is a disadvantage. The cross lease determines your rights as lessee.

When you purchase a cross lease flat, you need to ensure that there are no alterations to the building. It is advisable to inspect the file at the city council. When inspecting the property file at the council, you should also check to make sure that the plans of the flat conform to the actual outlines of the flat. The lessee is responsible for the maintenance of the interior and the exterior of the flat.

Next week I will talk about the agreement for sale and purchase, and if there is sufficient time I will also discuss other forms of title to land and the Land Information Memorandum that you can obtain from your local council in respect of the house that you are buying.

Thank you.

ARBEIDSVERHOUDINGE

Vandag gaan ek meer in diepte bespreek oor hoe die ooreenkoms beëindig word en hoe om probleme aan te spreek wat ontstaan in die werksomgewing.

'n Diensooreenkoms kan beeindig word deur ooreenkoms. ‘n Behoorlik opgestelde ooreenkoms sal voorsiening maak vir die prosedure wat gevolg moet word wanneer die ooreenkoms beëindig word. 'n Diensooreenkoms mag beeindig word deur kennisgewing deur die werkgewer. Al maak die ooreenkoms voorsiening daarvoor dat dit beëindig kan word deur kennisgewing deur die werkgewer, beteken dit nie dat die werknemer magteloos is nie.

Die werknemer kan nog steeds die kennisgewing aanveg. In so 'n geval sal die werknemer die onderliggende oorsaak van die kennisgewing aanveg.

'n Werkgewer kan natuurlik ook die werknemer afdank. Die ooreenkoms behoort voorsiening te maak vir die prosedure wat gevolg moet word alvorens die werknemer afgedank kan word.

Alhoewel ‘n Werkgewer 'n werknemer summier kan afdank, moet die werkgewer egter goeie gronde moet hê vir so ‘n drastiese stap. Die werknemer se optrede sal moet neerkom op ‘n baie ernstige verbreking van sy of haar pligte.

By die beoordeling of die afdanking geregverdig, is sal die howe nie ligtelik hulle oordeel in die plek van die werkgewer stel nie.

Indien die werkgewer die werknemer afdank, kan die werkgewer nie steun op inligting wat na die tyd ingewin is nie. Selfs in die geval waar die klagte teen die werknemer op wangedrag neerkom wat 'n element van oneerlikheid bevat, bepaal die reels van natuurlike geregtigheid dat die werknemer die geleentheid gegun moet word om die inligting wat die werkgewer het te weerlê of die teendeel te bewys. Natuurlike geregtigheid beteken dat die werknemer ook ‘n kans moet kry om syof haar kant van die saak te stel.

Dit is die werkgewer se plig om die klagte aan die werknemer te stel. Die werknemer moet die geleentheid gegun word om 'n verduideliking te gee. Die werkgewer moet met 'n oop gemoed na die verduideliking luister en die inligting wat die werknemer gee oorweeg. Dit mag dan ook beteken dat die werkgewer uiteindelik die werknemer se weergawe as vals verwerp.

Die howe het uitgewys dat die metode wat die ondersoek moet volg 'n praktiese balans moet handhaaf tussen die werkgewer se middele tot sy of haar beskikking en die reels van natuurlike geregtigheid teenoor die werknemer. Eers nadat die ondersoek voltooi is, moet die werkgewer ‘n eerlike opinie gevorm het dat die wangedrag van die werknemer afdanking regverdig.

Indien die werkgewer reeds voor die tyd van oordeel is dat die werknemer se optrede 'n afdanking regverdig, dan het die werkgewer sy of haar oordeel aan bande gele en is die reels van natuurlike geregtigheid nie nagekom nie.

Die howe sal eerder na die proses kyk wat die werkgewer gevolg het met die inwin van inligting tydens die ondersoek as die besluit om af te dank.

Die prosedure wat gevolg moet word is deur die howe soos volg uitgespel:

 Indien die werknemer se prestasie nie aan die werkgewer se vereistes voldoen nie, kan die werkgewer die werknemer ook afdank, maar hier geld ook streng reels.

 Die howe het die reels soos volg neergele:

Soos verlede keer verduidelik bestaan daar 'n griewe prosedure wat gevolg moet word.

 Griewe kan ontstaan uit die volgende:

Die wet maak eerstens voorsiening vir mediasie. Die mediasie word deur die departement van arbeid voorsien. Die mediator moet probeer om die partye sover te kry om hulle geskille by te le en die probleem op te los. Die partye kan gebruik maak van ‘n private mediator. Indien die partye tot ‘n vergelyk kom, kan die mediator dit aanteken en die partye is dan gebind daardeur. Die partye kan ook die mediator versoek om ‘n beslissing te maak en die partye is dan gebonde aan die beslissing.

Indien die mediasie nie suksesvol is nie, gaan die aangeleentheid na die arbeidsverhoudinge tribunaal (In engels authority). Dit is die tribunaal se taak om ondersoek in te stel na die aangeleentheid.

Die rol van die tribunaal  is nie om as regter op te tree nie, maar eerder om inkwisitories op te tree en die aangeleentheid te ondersoek. Die tribunaal kan die aangeleentheid terugverwys vir mediasie as die tribunaal van oordeel is dat daar wel ‘n kans is dat mediasie kan slaag.

Die tribunaal kan ter eniger tyd tydens die verrigtinge die aangeleentheid terugverwys vir mediasie. Die tribunaal kan enige inligting aanvra en ook die partye ondervra. Die tribunaal is nie gebonde aan tegniese reels nie, maar moet die prosedure volg en die bevinding maak wat regverdig is in die omstandighede.

Elke party by so 'n griewe prosedure is geregtig op verteenwoordiging, hetsy van 'n medewerknemer, ‘n verteenwoordiger van die unie of regsverteenwoordiging deur 'n prokureur of advokaat.

Indien ‘n party nie tevrede is met die besluit van die tribunaal nie, kan daardie party die aangeleentheid na die arbeidshof verwys. Die partye kan ooreenkom dat die aangeleentheid van voor af beslis word.

Die wet op arbeidsverhoudinge is geskoei op die beginsel van goeie trou. Die partye moet van die begin af ter goeder trou teenoor mekaar optree.

Dit sluit in dat die partye teenoor mekaar tydens die onderhandeling ten aansien van die diensooreenkoms reeds openlik en eerlik sal optree.

Dit is ook baie belangrik dat die partye tydens die grieweprosedure eerlik en openlik teenoor mekaar optree want die hof kyk ook of die partye eerlik en ter goeder trou teenoor mekaar opgetree het tydens die griewe prosedure.

Die primêre remedie wat tot die werknemer se beskikking is, is herindiensneming. Die werknemer is ook geregtig op vergoeding vir die verlies aan inkomste wat hy of sy gely het.

Laastens kan die howe ook vergoeding toeken vir die manier waarop die afdanking plaasgevind het. Byvoorbeeld as dit op so ‘n wyse gedoen is dat die werknemer verneder is.

Die betalings wat die werknemer ontvang was in die verlede belastingvry, wat natuurlik ‘n goeie meevallertjie beteken het vir die gegriefde werknemer. Hierdie skuiwergat is raakgesien deur die ontvanger en tans is sulke betalings belasbaar.

Employment Relations in NZ

The Employment Relations Act was promulgated in 2000. The basis of the act is that Employers and Employees must act in good faith to each other. Good faith entails that the parties have mutual respect and confidence in each other.

Many people feel that the act and the rules are too rigid. The main complaint against such a rigid system is that it makes it easy to employ people but difficult to dismiss them later. This is a perceived weakness.

It is important that the parties know what there rights are when they enter into an employment agreement. As with any other agreement an employment agreement is a contract. It is a contract to render services and the parties should know what they are entitled to do and what they may not do. The agreement spells out the rules that will apply to the relationship between the employer and employee.

When an employer offers a job to an applicant the applicant is entitled to a copy of the intended employment agreement. The employer has to inform the applicant that he or she is entitled to seek independent advice about the intended agreement. The person is also entitled to have a reasonable opportunity to seek advice. The parties must bargain fairly with each other. The final agreement between the employer and employee must be in writing.  An employer may be subject to stiff penalties if it does not have a written employment agreement with its employees.

If there is a union in the industry then there will be a collective agreement and the employee may not be employed on less favorable terms. A collective agreement is an agreement that the union as representative of the employees has negotiated with the employer. In such an agreement the union and the employer agree on the terms of employment agreements, although the individual agreement may be more favorable to the employee.

The act allows an employer to employ someone for a fixed term. The employer may only do this if he or she has genuine reasons to do so. A fixed term agreement is one that starts and ends on a fixed date. The reasons for the fixed term must also be advised to the employee. Genuine reasons will include seasonal work, project work or temping work. If the job is really a permanent one then the employer may not employ someone for a fixed term. The act is also applicable to a fixed term contract and such a contract must likewise be in writing.

An employer and employee may agree that the employee will be appointed for a probationary or trial period. This must be recorded in writing in the agreement. If there are any problems then the employer must discuss it with the employee. The employer cannot merely tell the employee at the end of the period that the employment is terminated. This will amount to unfair dismissal. The act is thus also applicable to such trial or probationary period.

The agreement between the employer and employee must contain as a minimum:

These are the minimum requirements for an employment agreement. There is also other legislation that contains minimum requirements. These are legislation relating to minimum wages, annual leave, statutory public holidays, special leave (which includes sick leave and bereavement leave) and parental leave.

There are more matters that the parties should include in their agreements although it is not required by the Act.

It is desirable that the employer and employee agree on the method of payment of the wages and the calculation thereof. The employee and the employer may agree to weekly or fortnightly payment of wages. The employee is also entitled to be paid in cash, although the parties may agree that the wages may be paid into the employee’s account.

The employee should negotiate for a pay review and the parties should agree on criteria for such review. It is also a good idea to have an annual review clause in the agreement. If the employer requires the employee to perform additional work than to that required by the agreement then the employee and employer can negotiate what the terms of such additional work will be. This will include an increase in his or her wages.

Employees are entitled to a minimum of three weeks paid annual leave after working for one year. It is of course possible that the parties agree on more favorable annual leave entitlement.

There are 11 public holidays and if the employee has to work on one of these days the employee is entitled to a day off in lieu of the day worked. The agreement should also provide for a rate of pay if the employee works on such a day.

The employee is entitled to a minimum of 5 days special leave for sickness and bereavement. Once again, the parties may negotiate better terms for the employee.

An employment agreement ends, amongst other things, when the employer or employee gives the other party notice of termination.

The parties may include in the negotiations what period of notice of termination they should give each other. It is desirable to have such a clause so that both parties know what their rights and obligations are in this respect.

The agreement should also contain what rules the employer must comply with when dismissing the employee. The Act requires that the employer should act fairly to the employee when deciding whether to dismiss or not.

If the employer has rules for disciplinary action against employees, the employer must follow those rules.

If, for example, the procedure provides for a written warning then the employee is entitled to first receive such a warning.

The employee’s side of the matter must be heard and the employer should keep an open mind when hearing the employee’s version. If the employer does not follow these rules the dismissal may be unfair and the employee entitled to reinstatement, compensation and damages for humiliation.

If there are employment relations problems between the employee and employer the parties must try to solve the problem themselves.

The Act requires the parties to talk to each other first and to be clear what the problem is.

The act provides for mediation and if that does not work then the matter can be referred to the Employment Relations Authority.

If the parties are not satisfied with the decision by the authority the matter may be referred to the Employment Court. The parties can also opt for arbitration by private arbitration, but the finding or recommendation by the arbitrator is not binding on the authority or the court.

Employment relations problems can be caused by various matters for example – unjustifiable dismissal, sexual harassment, unjustifiable action which disadvantages the employee, discrimination on any grounds, racial harassment and duress over membership of a union.

If you consider what I have said today, I think you will agree that the Act is there to protect both the employer and the employee. It is flexible enough to adapt to changing circumstances and it also provides clarity on the rights and responsibilities of both parties to the agreement.

The department of labour is very helpful and you can visit their website at www.ers.dol.govt.nz or you can call the infoline on 0800 800 863.

SALE AND PURCHASE AGREEMENT

Whilst preparing for my last talk, I realised that it is very important that we also talk about the agreement for sale and purchase since it is the first step in the legal process. If you do not understand the sale agreement you can find yourself literally up the creek without a paddle if things go wrong.

The Auckland District Law Society and the Real Estate Agent Board have a standard agreement for sale and purchase that is used in 99% of all sales. The agreement provides for all types of contingencies, but I am only going to discuss those that I feel you should know about prior to signing such agreement.

The agreement provides for a date, but this is not necessarily the date that the agreement was signed by the parties. This date is important since it is used to calculate the periods provided for in the agreement. There will be two signed agreements and each party is entitled to one.

Both parties have solicitors acting on their behalf. The Purchaser’s solicitor will draft the transfer documents and forward it to the Vendor’s solicitor who will arrange for execution. Each party may choose their own solicitor and it will usually be two different solicitors to avoid a conflict of interest. As far as the matter of costs are concerned, I would advise that you call the solicitor beforehand and ask for an estimate of the costs.

The agreement provides for the possession date. On this day the Purchaser pays the purchase price, the mortgagee (bank) is paid and the transfer documents sent to the Purchaser’s solicitor. If you therefore provide for the possession date, make sure that you will be able to pay the purchase price on that day.

The Land Titles Office has done away with duplicates of certificates of title and if you want to ensure that the transfer is registered you must do a search of the register. The banks require that a search copy be obtained after registration.

The Purchaser can also indicate whether he or she must first obtain finance to purchase the house. It will also be expected of the Purchaser to pay a deposit.

The agreement provides for a LIM (Land Information Memorandum). This is obtained from the City Council against payment of a fee. It is good practice to require a LIM report. The agreement is then made subject to the LIM. This only applies if the Purchaser indicated that he or she requires a LIM. The Purchaser’s solicitor normally obtains the LIM from the council.

The LIM will contain valuable information. For example, it will indicate whether all the required inspections were carried out when the house or any other structure was erected. If there is no final inspection, the Purchaser can require from the vendor that he or she obtain a safe and sanitary report. Such report will indicate whether there are any problems in respect of the house. If the Vendor fails to do it, the Purchaser can cancel the agreement.

It is also a good idea to inspect the property file at the council. Such inspection will disclose whether there are any other problems in respect of the property. An example will be if the Vendor has made alterations to the house without first obtaining consent from the council.

I recently came across a case where the Vendor had a swimming pool erected without the council’s knowledge. The Purchaser found out by inspecting the council’s records and noting that it does not say anything about a swimming pool.

If you are going to occupy the house, make sure that the agreement provides for vacant possession. If there are tenants in the house the Vendor must give them notice to vacate.

The agreement will also provide for the chattels that are included in the sale. Normally this will be items like the stove, curtains and sometimes the dishwasher.

The Purchaser can also inspect the certificate of title of the Vendor and if there is anything adverse to the Purchaser’s rights appearing on the title, then the Purchaser may request the Vendor to remove it. A right of way is a good example of such encumbrance. If the vendor does not or cannot remove the encumbrance, then the Purchaser can cancel the agreement.

Both the LIM and the search of the title must occur within 15 working days from the date of the agreement. Sometimes pressure is exerted upon the Purchaser to provide for a shorter period. If it is only for the title then it is not a problem, but it takes about 10 working days for the council to prepare the LIM report and I would advise against reducing the 15-day period.

The Purchaser is entitled to inspect the property once before settlement. The agreement provides that the Purchaser must give reasonable written notice of his or her intention to exercise the right. Not many Purchasers exercise this right. If you are not sure whether everything is in order with the property, I suggest that you exercise this right to ensure that you get what you are paying for.

The Purchaser carries the risk of the destruction of the house from the date of possession. You should therefore insure the house from that date. The banks will require you to do it and to provide proof to them of the insurance and that their interest as mortgagee is noted.

The Vendor need only point out the boundaries to the property if it is a section that is being purchased.

The vendor warrants that the chattels and electrical installations are in a good working order, fair wear and tear excluded.

The Vendor must also notify the city council of the change of ownership.

It is also very important to remember that the agreement is an enforceable agreement even if all the conditions are not yet satisfied. If any condition is not satisfied then the agreement will come to an end. If therefore, the finance is not approved, then the agreement will come to an end as a result of non-fulfilment of that condition.

You will recall that in South Africa, it was viewed differently and the fulfilment of the finance condition brought about the agreement. The agreement therefore only came into being once the finance was approved.

The agreement can only be cancelled by giving notice to the other party of the non-fulfilment of a condition. If I may use an example, if the finance is only approved one day after the due date and the Vendor’s solicitor has not given notice that the agreement is at an end and the Purchaser’s solicitor advises that the condition is satisfied, then the agreement is still on foot. Only a notice prior to the Purchaser’s notice would have cancelled the agreement. A positive action is required.

Parties may also insert conditions in an agreement other than those already contained in the agreement. Of the more popular ones is that the Purchaser must be satisfied with a report in respect of the building by a builder or building inspector.

FORMS OF TITLE

Two weeks ago we discussed the cross lease and I promised to discuss other forms of title today. In New Zealand you find the fee simple, cross lease and unit title which is also a fee simple, but in a different form. A fee simple is the widest ownership that you can have in respect of land.

The fee simple is very similar to what we encountered in South Africa and since we already discussed the cross lease in some detail, I will limit my discussion to unit titles. Unit titles are similar to sectional title with some differences.

Although in everyday speech the word "land" is usually taken to refer to the surface of the soil, in law it includes not only the surface but also the spaces above and below the surface.  Thus the freehold owner of the land owns the whole of the space within the vertical boundaries shown on the survey plan whether that space is above or below the surface.

The Unit Titles Act permits the space within a freehold title to be subdivided horizontally as well as vertically by lodgement of a plan which subdivides the property into:

(a)            Principal units;

(b)            Accessory units which are units such as garages and gardens; and

(c)            Common property.

The title to the unit is called a “stratum title” or a “unit title”.

Before a unit plan is deposited in the Land Titles Office every principal and accessory unit is assigned a unit entitlement on the basis of the relative value of the unit in relation to each of the other units on the plan. 

A valuer undertakes this task and the unit entitlements are endorsed on the plan. 

Your unit entitlements determine:

1.       your voting power at meetings;

2.       your share in any common property; and

3.       your obligation to contribute to a body corporate reserve fund for insurance and general maintenance.

As owner you will automatically become part of the body corporate which comprises the owners of all the units. This can be thought of as a company which continues for as long as the titles exist. 

The main duties of the Body Corporate are:

1.       To insure all buildings in its own name under a replacement policy;

2.       To administer the common property and keep it in good order;

3.       To set up a bank account to meet insurance premiums and other common outgoings;

4.       To make levies on the various registered owners in proportion to their unit entitlements;

5.       To issue certificates as to the assets and liabilities of the Body Corporate and the position with regard to levies.  These are most often required on sale so that an incoming owner may be advised of the position; and lastly

6.       enforce the Body Corporate rules.

The Body Corporate is a separate entity capable of bringing and defending legal actions.

It is a legal requirement that the Body Corporate hold a combined insurance policy over all the units with one insurance company.  The cover is for the replacement value of the whole building and all the units.

The Unit Titles Act contains the body corporate rules.  These rules may be amended by resolution of the owners.

The standard rules provide for the body corporate to hold an annual general meeting and extra ordinary general meetings. 

The owners of the units are entitled to vote at the general meeting.  The matters addressed at the general meeting are determined by a majority vote.  All votes shall be of equal value unless a poll is requested or a special resolution is requested before the meeting.  In these cases, such vote corresponds to the unit entitlement of the Principal Unit. 

There are some situations where a unanimous resolution is required to authorise the body corporate to carry out an act. 

On giving written notice to the body corporate a mortgagee is entitled to exercise voting rights in accordance with the provisions of the mortgage.

The Body Corporate is required to have a secretary.  In the case of large developments the secretary is often an independent person or company who is paid to administer the affairs of the Body Corporate.  With small developments the secretary is usually one of the proprietors.

In the great majority of cases unit title subdivisions run smoothly with little need for continuing legal advice. 

However, there are four particular circumstances in which I would strongly recommend that you seek advice:

1.       If you find the Body Corporate has not insured the development in its own name or has allowed the insurance to lapse;

2.       If you or any of the other owners in the development wish to enlarge or alter a unit in such a way that the exterior will no longer be consistent with the survey plan;

3.       If any owner proposes to transfer an accessory unit to another owner in the development;

4.       If any of the common property is to be sold to an outsider or further common property is to be acquired.

If one understands how unit titles work then you will realise that there are no real risks in being an owner of a unit in a unit title development.

Next time we will talk about the ante nuptial contract that you entered into in South Africa and whether it is enforceable here in New Zealand.

Thank you.

IS YOUR SOUTH AFRICAN ANTE NUPTIAL CONTRACT ENFORCEABLE IN NEW ZEALAND?

Many of us entered into an ante nuptial contract (ANC) whilst still in South Africa. Upon immigrating to New Zealand, we are not sure whether the ANC is enforceable or not. Many of us accepted that it is not and purchased properties in joint names and also dealt with accounts in a similar manner.

I recently came across two interesting court cases that deal with this question.

The Property (Relationships) Act 1976 deals with relationship property of married couples and also de facto couples. Next time I will discuss the Act and what effect it has on marriages and de facto relationships.

Parties can agree that the Act will apply to their relationship property. They do not have to agree before the marriage or relationship begins, but can do so at any time.

The Act is not applicable if the parties agree that the laws of another country will apply to their relationship property. The requirements are that the agreement should be in writing and that the agreement must be valid in terms of the law of the foreign country. The act is therefore not applicable to an ANC that was entered into in South Africa.

There is however, a proviso to the Act and that is that the court can decline to enforce the ANC if it is unjust or against public policy to enforce such agreement.

The million dollar question is whether the application of South African law will lead to an unjust result or is against public policy.

The two cases I came across dealt with this question.

In the one case the court held that the agreement is silent about property in New Zealand and therefore declined to enforce the agreement. The court further held that it would be against public policy to enforce the agreement.

The other case dealt with parties that entered into an ANC on the accrual system. They separated in New Zealand and approached the court to determine whether their ANC was enforceable or not.

The facts of the case were that the parties pooled their money into a frozen fund from which they repatriated money to New Zealand. At the time when the money was placed into the frozen fund, the husband became the owner of the money. The separate estates as it existed prior to this disappeared.

The wife argued that she had no estate that she could deduct from the pooled estate, whilst the husband had such an estate. She would therefore share in a reduced estate after the husband deducted his pre-marital estate from the common estate. The court agreed with the wife.

The court did not find that the agreement was invalid. On the contrary, the court held that the agreement was valid. The result was unjust and the court refused to enforce the agreement.

Is your ANC enforceable or not?

In two cases where South Africans sought to enforce an ANC, the courts declined to do so.

In the last case the court held that each matter must be judged on its own merits. Unfortunately this does not clarify the position of the rest of us. Luckily the court did not hold that all such ANC’s were invalid or unenforceable.

An uncertainty therefore exists. This does not mean that everybody will have to wait until they separate before they will know whether their ANC is going to be enforced or not.

The Act provides that parties may enter into agreements even after they married or became de facto partners. Any uncertainty can be nullified by entering into an agreement that complies with the terms of the Act.

You do not have to approach the court for consent to enter into an agreement after the marriage. In South Africa you had to approach the court to change your marital property regime.

It is, however, important that the agreement complies with the Act and I would advise you to instruct your solicitor to prepare such an agreement for you. This will ensure that any uncertainty has been nullified and that the agreement is enforceable.

Thank you.

HOW DOES THE PROPERTY (RELATIONSHIPS) ACT 1976 AFFECT YOU?

The Property (Relationships) Act 1976 as amended became effective on 1 February 2002. The act has far reaching implications for married couples and de facto partners.

Prior to February 2002 the Matrimonial Property Act, as it was then known, did not apply to de facto relationships.

Prior to 1 February 2002 the courts used constructive trusts to assist a plaintiff in a de facto relationship to claim some of the assets that the parties amassed during the relationship, but was owned by the other party.

The general rule was that the parties kept that which he or she brought into the relationship as his or her sole property. A party was not entitled to claim anything from the other party.

This caused an injustice to a party who did not contribute financially to the increase in the estate of the other partner. If I may use the example of a female partner who gave up her career to raise children, or where the one partner worked in the business of the other and thus contributed indirectly to an increase in his or her estate.

The onus of proving that a partner was entitled to more than that which he or she contributed rested on the one who wanted to share in the other’s estate.

When married couples separated the starting point of any division of matrimonial property was fifty-fifty. In the case of a de facto relationship the starting point was only that which a party brought into the relationship.

The act provides for marriages and relationships of long duration. If the parties were together for three years, it is deemed to be a relationship of long duration. If the parties have children it is also deemed to be a relationship of long duration. Upon the subsequent separation of the parties, the relationship property is divided equally between them subject to certain provisos.

The courts can order an unequal distribution of the relationship property. This will happen when the one party has an enhanced earning capability because of the division of the roles in the relationship. One party may have given up his or her career to assist the other party in achieving a higher income capacity. One party may have supported the other whilst he or she was studying and thus furthering his or her career. In such a case the court can order a lump sum payment to the other party or periodic payments if a lump sum payment is not possible.

If the relationship is deemed to be one of short duration then each party will only be entitled to that which he or she has brought into the relationship.

Any property that is separate property is not subject to division.

Separate property is: 

Any separate property will become relationship property if it is used as family home or family chattel, if it becomes intermingled with relationship property or is absorbed into relationship property.

If the parties want to ensure that separate property remains so then they should enter into an agreement in terms of the act. In this agreement the parties will nominate their separate property and it will remain thus irrespective of the fact that it might have been used to buy a family home.

The act also deals with debts of the parties. A debt may be deducted from the relationship property if it can be categorised as a relationship debt.

A debt will qualify as such if it is one of the following types of debt:

One should be very careful when deciding whether a debt is a relationship debt or not.

A mortgage may have been executed by both parties and registered over the family home. On the face of it, it might be classified as a relationship debt and therefore deductible from all the relationship property to ascertain the net value of the relationship property.

But what if the mortgage is to secure a loan of one of the parties to purchase a boat that is separate property or to secure a loan of one party of a personal nature? In such a case the debt will not qualify as a relationship debt and may not be deducted from the relationship property.

The importance of determining the nature of a debt or of an asset arises only when the parties separate. The goal of the act is to ensure that a fair distribution of the relationship property is effected.

The act acknowledges the fact of de facto couples and of same sex de facto couples. It eradicates the injustices that were prevalent under the old regime and brought about a fair way of dealing with separations.

Next week we will discuss what your rights and responsibilities as neighbour are.

Thank you.

What are your rights and responsibilities as a neighbour?

Often you hear about problems among neighbours and it makes you wonder what your rights as neighbours are, and how you would deal with a similar problem should it happen to you.

I thus thought that I should talk about neighbours and what your rights and responsibilities are as owner. The question of course is how far do your rights as neighbour stretch?

Ownership is the widest range of rights you can enjoy in respect of an object. Does that mean that I can do whatever I want to with my property, even if it infringes another person’s rights?

Changed social values saw the rise of social enactments. This type of legislation limits an owner’s rights in respect to his or her property to protect third parties’ rights. The flipside of a right is always a corresponding responsibility. In other words, if you have the right to the enjoyment of property, then someone else will have the responsibility not to infringe on your right of enjoyment.

Today we'll be talking about the responsibilities of neighbours to contribute to a fence between properties, fencing agreements and overhanging branches of trees.

The Fencing Act, 1978 provides that one neighbour may require from the other to contribute to the erection, maintenance or repair of the fence between the two properties. The one owner must give written notice to the other wherein the following should be addressed:

The parties are normally responsible for the cost of the fence in equal shares.

If someone receives such a notice, he or she must object within 21 days against the notice, and that person should also provide counter proposals that he or she thinks will be appropriate in the circumstances. If the party first receiving the notice do not react within 21 days by delivering a cross notice, it will be deemed that the neighbour agrees.

If the parties cannot settle the dispute within 21 days between themselves then the matter may be referred to the District Court for finalisation. The Act provides for the procedure that must be followed in this event.

If any work has been undertaken before notice has been given, the other party may not be held liable for any contribution to the work thus undertaken.

The Act provides that the parties can enter into a fencing agreement in terms whereof one party cannot demand from the other any payment fore the erection of such a fence. Such agreement can be registered against the title of the properties.

A developer will normally register such agreement against the title to prevent notices being served on him or her by the owners of properties in a development that has not been sold out. This can be an expensive exercise if such agreement is not registered against the title.

Where a tree's branches overhangs the fence or the roots of the tree grows under the fence into the neighbour’s property, the neighbour can cut the branches and the roots insofar as it encroaches onto his or her property. It is however important that you know exactly where the boundary is to ensure that you have the right to act.

The District Court also has jurisdiction to order the occupant of a property to trim or remove trees if the court is satisfied:

The court must be convinced that the damage that the applicant will suffer is more severe than that of the other party if the court does not grant the order.

The court may not make an order in respect of any tree that is protected by the Resource Management Act, 1991.

If a person has erected a building, fence, or made any other improvements to his or her property without first obtaining a building permit from the local authority, the court can make a similar order in respect of such improvements.

It is therefore, important that you obtain a building permit from the local authority prior to any improvements on your property. Should the court order you to remove the improvements it can have far reaching financial consequences to you. The mortgagee might also decide to require further security from you due to the fact that the removal of the improvements diminished the value of its security.

Next time we'll talk about the Consumer Guarantees Act, 1993

CONSUMER GUARANTEES ACT, 1993

 When you buy a product or contract for a service, what are your rights as consumer of those products or services. What can you do if the product is not suitable for the purposes for which it has been purchased? Can you cancel the agreement and require that the supplier of the goods pay you back the money that you paid or do you have to be satisfied with a reduction in price or similar products?

The Consumer Guarantees Act, 1993 covers these events. The Consumer Guarantees Act and the Fair Trading Act, which we will discuss at another time, is the backbone of consumer protection in New Zealand.

The Act is there to protect the consumer who has been wronged by a supplier of goods or services supplied in trade.

A consumer is someone who acquires products or services for household purposes and not for re-supply to the public in trade.

The supplier of the goods guarantees that it has the right to sell the goods, that the goods are free from any undisclosed security and the consumer has the right to the undisturbed possession thereof.

The supplier further guarantees that the product is of an acceptable quality. Acceptable quality is determined by factors such as the general appearance, finish, price and statements made about the goods by the supplier.

The supplier of the goods also guarantees that the goods are fit for the purposes for which it has been purchased. This will apply insofar as the consumer has made the specific purpose for which it was purchased known to the supplier and also if the supplier has represented that it is fit for a specific purpose.

If a supplier sells goods by sample or description, then the supplier guarantees that the goods correspond with the samples or the description.

In any case where the parties did not agree on a price, the supplier warrants that the consumer will pay a reasonable price for the goods.

The manufacturer of goods guarantees that reasonable action will be taken to ensure that facilities for the repair of the goods and the supply of parts for the goods will be reasonably available for a reasonable period after the goods are sold.

The rights of the consumer is in addition to any other guarantees that the supplier chooses to give and an express guarantee does not replace or override the act. A consumer can enforce an express guarantee against a manufacturer even if there is no contractual relationship between the parties.

A consumer’s remedies will depend on the type of problem that exists. A supplier may comply with the requirement to remedy the failure of any goods by doing any of the following:

The consumer must exercise his or her rights to reject the goods within a reasonable time. If the goods are not rejected within a reasonable time, or the consumer has disposed of the goods, or if it has been destroyed or lost then the right to reject the goods will not be available to the consumer.

If the goods were damaged after delivery due to a cause unrelated to the state or condition at the time of supply then the right to reject is also lost.

Reasonable time will be such a period of time that it would be reasonable to expect a defect to become apparent having regard to the type of goods, the use to which is put, the length of time for which it is reasonable for them to be used and the amount of use reasonably expected before the defect can be expected to become apparent.

The options available to the consumer of the goods to require that the failure be remedied are as follows:

 Similar rights exist against manufacturers of goods.

The Disputes Tribunal has jurisdiction to hear any matter that arises out of the act, if the amount involved does not exceed $7,500.00. The parties can however agree to refer a matter to the tribunal if the amount involved does not exceed $12,500.00.

Next time we will discuss the consumer guarantees act in so far as it pertains to services and also, if there is time the Fair Trading Act.

Thank you.

CONSUMER GUARANTEES ACT (Part II)

Last week we discussed the Consumer Guarantees Act and how it applies to the supply of products. This Act and the Fair Trading Act are the backbone of consumer protection in New Zealand.

Last week I undertook to discuss the Fair Trading Act together with the Consumer Guarantees Act, but I decided to only discuss the consumer guarantees act today and to make the fair trading act the topic of our next discussion

Both these enactments are very important since they regulate our rights against suppliers of services and goods. The fact that these acts are also part of the school curriculum is an indication of the importance thereof. A basic knowledge of these acts can only be of assistance to those of us who are new to the country.

The consumer is also protected against a manufacturer of products. A consumer can claim damages from the manufacturer of goods in the following circumstances:

It is important to remember that the act makes an exception to the rule that someone can be held liable only in the case of an agreement or a tort. There is no agreement between the manufacturer and the consumer; the agreement is between the supplier and the consumer.

The Consumer Guarantees Act is also applicable to services.

The supplier of services guarantees the following:

If the consumer has indicated the reason for the services then the supplier will also guarantee that the services will comply with the reason for the purchase.

It will also not apply if it is unreasonable to expect the supplier to guarantee that the service is suitable for the purposes for which it has been purchased.

It will also not apply in the case where the parties agreed that a method to determine when the service should be delivered would be used.

If her supplier charges an unreasonable price, then the consumer can refuse to pay more than a reasonable price.

If the defect in the services can be remedied, then the consumer can require from the supplier to remedy the defect. If the supplier fails or refuses to do so, then the consumer can have it remedied elsewhere and claim the costs thereof from the supplier.

If the defect is of a substantial nature, the consumer can cancel the agreement.

The cancellation need not comply with any form; the only requirement is that it should come to the suppliers notice.

In the event of a third party, not related to the supplier making a misrepresentation and the consumer acting on that, then the consumer does not have the right to claim damage from the supplier. The reason is that the supplier did not commit any wrong.

The consumer is only protected if the service is supplied in normal trade.

It is a crime for a supplier to endeavor to contract out of the act. In other words, the supplier cannot require from the consumer to waive his or her rights in terms of he act.

An example will be where the consumer purchases a fridge and the supplier failing to repair the fridge properly and after notice still refuses to repair it. The consumer can then take the fridge to another supplier and have him or her repair it and then recover any damages from the original supplier.

Next week, we will discuss the Fair Trading Act.

The Fair Trading Act, 1986

The Fair Trading Act is the second leg of consumer protection in New Zealand. Last week and the week before that we discussed the consumer guarantees act and as promised, I am going to discuss the Fair Trading Act today.

The Fair Trading Act focuses on misleading advertisements, deceptive and misleading conduct and false and misleading representations about the provision goods and services.

The act prohibits unfair trading practices and provides new consumer information and product safety standards. Any person can take action if they believe that the act has been contravened. The Commerce Commission may prosecute offenders and obtain injunctions to stop offending practices.

The Act applies to any person resident or carrying on business in NZ, who engages in or conducts business relating to the supply of goods or services or the granting of an interest of land in NZ.

To engage in conduct includes omitting to do an act or making it known that an act will not be done.

Section 9 of the act is of general application and provides that no person shall engage in misleading or deceptive conduct or in conduct that are likely to mislead or deceive. It is important to remember that it applies to both conduct in the past and also conduct that may be misleading in the future. A contravention of this section does not constitute an offence but there is a wide range of civil remedies available.

An example of such conduct can be found in a court case where a real estate agent advertised a waterfront property. The advertisement stated that it had magnificent views. This statement was true at the time of the advertisement. The agent was aware that the local yacht club has decided to move which would affect the sea views. The court held that although the statement was literally true, the failure by the agent to disclose that the yacht club was moving its clubhouse and it was going to interfere with the view, was making the statement false.

Section 10 of the act applies to goods specifically and provides for conduct which is liable to mislead in respect to goods. This section is not aimed at one person specifically being wronged by the conduct but the public at large.

Section 12 of the act applies to persons in employment. It is aimed at the representations and the conduct of the employer prior to the acceptance of an offer to enter into an employment agreement. Not all conduct will amount to a breach of the act. The remedy will in all probability be breach of contract.

Section 13 deals with false and misleading representations. The representations must be made in trade, in connection with the supply, or the possible supply of goods or services.

It is also applicable to the promotion of the supply or the use of goods or services. 

A person may not falsely represent that goods are of a particular kind, standard or quality. An example of such misrepresentation will be if a ring of zirconia is represented to be a diamond ring. Another example relating to services will be if a builder holds himself out to be a master builder but is not one.

It will also be a contravention of the act if someone advertises that a specific person has acquired goods whilst that is not true. An example will be if it is advertised that a sport star has agreed to acquire a sporting product, but that has never occurred.

The act also prohibits a supplier to advertise that secondhand goods are new. It will also apply to the sale of a motor vehicle if the supplier represents that the car is of a year other than the correct year of manufacture. This will cover the imports of vehicles to NZ. The year of first registration will be the year it is imported into NZ, but the year of manufacture may be quite a few years before this. The car could be much older than the date of first registration in NZ.

It is also an offence if the supplier of goods falsely represents that the goods have the approval of someone that is highly regarded in the community.

The terms and conditions of any purchase must be clearly displayed. The terms relating to the price must also be disclosed and not only in the fine print but in sufficiently clear language.

Inertia selling is also covered by the act. This is the type of selling where goods are sent to the consumer with a notice that the goods will be deemed to have been accepted if the consumer does not expressly reject the offer.

False representation as to the origin of goods is also covered by the act. It is not required that the country of origin of goods be disclosed, but if it is it must be true. If the name of the product can be misleading as to the country of origin then the country of origin must be disclosed.

Thank you

The Insurance Ombudsman

The office of the insurance ombudsman was created to deal with complaints about medical insurance, life assurance, short-term insurance and certain saving schemes offered by the various insurance companies.

Any individual or group of persons can lay a complaint at the insurance ombudsman as long as the complaint falls within the following framework:

The ombudsman must first determine whether its office has jurisdiction to investigate the matter. He or she can call for information from both parties and must, if so requested, provide reasons for any decision.

If the company does not agree with the decision, it can approach the High Court for a declaratory order.

Any complaint must first be dealt with by the internal complaints department of the company. The complainant must lay a complaint with the ombudsman within 2 months after the company notifies him or her that it cannot resolve the complaint.

The ombudsman will inform the company about the fact of the complaint and the nature of the complaint. The company will also receive a document from the ombudsman authorising it to release information about the matter to the ombudsman. This authorisation will be given by the complainant.

The company will also be requested to provide information to the ombudsman about the complaint together with such comments it wishes to make.

The ombudsman can take such information as it deems fit into consideration and is not bound by the rules of evidence.

The ombudsman will first endeavour to settle the matter between the parties by agreement. If this is not possible, either party can request a written recommendation.

Either party can comment on the recommendation within one month thereafter. If it is recommended that the company pay money to the complainant and the complainant accepts the recommendation in full and final settlement, the matter can be dispensed with. The complainant cannot accept the recommendation and then institute proceedings against the company for the balance.

If the complainant accepts the recommendation within the one-month period, but the company does not, the ombudsman can make an order against the company.

Any order cannot exceed the amount of $100,000.00. The ombudsman can also order the company to pay damages to the complainant. The company is bound by the order of the ombudsman.

If the company is of the opinion that the facts justify a test case, the matter may be removed from the ombudsman. If either party institutes proceedings within 3 months thereafter, the company will pay the reasonable costs of the complainant.

You can contact the ombudsman at:

PO Box 10845

Wellington.

Disclaimer: The material contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. The author accepts no responsibility for any loss or damage which may arise from reliance on information contained in this article.