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New Zealand’s Specialist
Project Lawyers

There is a marked difference

in the way Greenwood Roche operates. From the outset we have focused on clearly defined specialist areas, retaining highly respected legal experts in each field. We then take that further; ensuring clients have direct and regular access to the most senior partners and lawyers, in a cost efficient manner.

Close contact with experts and clear cost advantages

We advise on a range of significant public and private sector projects. To ensure our specialists are always where they’re needed, we operate as one office with hubs in Auckland, Wellington & Christchurch.

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Recent Projects

Projects

Film Studios – Section 71 Proposal

On 16 September 2020 the Associate Minister for Greater Christchurch Regeneration...

Recent Projects


Film Studios – Section 71 Proposal

On 16 September 2020 the Associate Minister for Greater Christchurch Regeneration approved Regenerate Christchurch’s proposal to amend the Christchurch District Plan and the Canterbury Regional Policy Statement to provide for the development and operation of commercial film and video production facilities in Christchurch.


The Minister approved the proposal developed by Regenerate Christchurch, with assistance from Greenwood Roche, and exercised powers under section 71 of the Christchurch Regeneration Act 2016 for the final time before the section was repealed.

The amendments will come into force on 13 October 2020, and result in a planning framework enabling commercial film or video production activities to locate in specific areas in Christchurch.
Demand from local and international film companies for production facilities in New Zealand is high, but there are no major production facilities in the South Island. The establishment of such facilities in Christchurch, made easier through the amendments, presents an exciting prospect for the city’s creative identity and industry and for the economic and employment opportunities that these facilities would provide.

This proposal is also significant as the last regeneration initiative performed by Regenerate Christchurch. It has been a privilege for Greenwood Roche to provide legal support to this now-disestablished organisation since 2016, and this outcome is a fitting end considering the hard work and dedication of the Regenerate team over the last four years.

The Minister’s decision can be viewed at the following link:

https://dpmc.govt.nz/publications/public-notice-film-studios-proposal-approved;
 


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Hagley Oval - Section 71 Proposal

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Hagley Oval - Section 71 Proposal

Hagley Oval - Section 71 Proposal

On 23rd December 2018 Hon Poto Williams, the Associate Minister for Greater Christchurch Regeneration approved a proposal to amend the Christchurch District Plan provisions for Hagley Oval to enable it to host large international fixtures and meet modern day broadcasting requirements.


Greenwood Roche assisted Regenerate Christchurch in developing the proposal on behalf of the Canterbury Cricket Trust.

The proposal approved by the Minister amends the Christchurch District Plan through section 71 of the Greater Christchurch Regeneration Act 2016 (GCR Act). The approved proposal incorporates the current resource consent conditions into the Plan and amends certain aspects of those conditions, including:

  • Amending the current condition to increase the four, retractable light towers to allow six permanent light towers to meet international broadcast standards.
  • Allow more lenient pack in and out timeframes for temporary facilities associated with hosting cricket matches to improve health and safety and limit damage to the Oval grounds.
  • Increasing the number of fixtures allowed per season, including an allowance for hosting International Cricket Council events on years that they occur.

These changes will mean that Hagley Oval will be able to host day-night matches that are now required by top-tier teams, allowing Hagley Oval to be more competitive when bidding for games compared to its rival cricket grounds.  With the Women’s Cricket World Cup approaching in 2021, the changes will allow Christchurch City to bid for and host games in this tournament.

Through the public participation stage of the process, 1,253 written comments were received, of which 83 percent were in favour of the proposal.

The Minister’s decision can be viewed at the following link: https://dpmc.govt.nz/sites/default/files/2019-12/Hagley Oval - Section 71 Proposal - Signed Decision Paper_1.pdf


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New Dunedin Hospital

Following the acquisition of all land needed for the New Dunedin Hospital, demolition...

New Dunedin Hospital

Recent Projects

New Dunedin Hospital

New Dunedin Hospital

Following the acquisition of all land needed for the New Dunedin Hospital, demolition of the existing buildings has commenced - starting with the former Cadbury Warehouse. The $1.4 billion hospital will be developed over the next 6 years and will occupy land on either side of St Andrews Street.


A team from Greenwood Roche is assisting the Ministry of Health on the development of the hospital. We have acted on the alterations to the Dunedin City Plan to facilitate the hospital, the development of the site masterplan, the acquisition of the required land, the payment of compensation to affected landowners and tenants, and on the consents required for the hospital.


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Similar projects
Ministry of Health - Redevelopment of Christchurch and Burwood Hospitals

Recent Projects

Ministry of Health - Redevelopment of Christchurch and Burwood Hospitals

Ministry of Health - Redevelopment of Christchurch and Burwood Hospitals

Over the coming years, the Burwood Health Campus and Christchurch Hospital will undergo a $650 million re-development, the largest investment in public health facilities in New Zealand.


Greenwood Roche has successfully assisted the Ministry of Health in obtaining consent for the Burwood hospital redevelopment and a designation for the new Acute Services Building at Christchurch Hospital. The designation has been progressed utilising the provisions of the Canterbury Earthquake Recovery Act and has required a very thorough and careful assessment of the tests within that Act. 

The hospital project is the third significant development project within Christchurch City that Greenwood Roche has successfully accelerated via the provisions of the Recovery Act. 


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Ministry of Justice - Christchurch Justice and Emergency Services Precinct

Recent Projects

Ministry of Justice - Christchurch Justice and Emergency Services Precinct

Ministry of Justice - Christchurch Justice and Emergency Services Precinct

This purpose built precinct will bring Christchurch’s justice and emergency services together on one site in central Christchurch. It is the largest multi-agency government co-location project in New Zealand’s history.


Greenwood Roche advised the Ministry of Justice regarding the resource management aspects of the Christchurch Justice and Emergency Precinct.  This project is one of a number of anchor projects we are involved in.


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Te Raekura Redcliffs School

Te Raekura Redcliffs School was opened by Prime Minister Rt Hon Jacinda Ardern on...

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Te Raekura Redcliffs School

Te Raekura Redcliffs School was opened by Prime Minister Rt Hon Jacinda Ardern on 25 June 2020 nearly 10 years’ after it was closed in response to the 2011 earthquakes. 


Lauren Semple and Rachel Murdoch advised Regenerate Christchurch on the use of the Greater Christchurch Regeneration Act 2016 to facilitate the rezoning of the new school site for that purpose, and the rezoning of the former site as a reserve. 


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Sale of greenfield development land in Auckland

Our client, one of Auckland’s largest landholders, recently sold nine super...

Recent Projects


Sale of greenfield development land in Auckland

Our client, one of Auckland’s largest landholders, recently sold nine super lots of bare land to a respected developer under a long term staged disposal and development agreement. Over time, the land will become a significant new mixed-use centre.


Greenwood Roche assisted with negotiating the terms of the agreement for sale and purchase including masterplan provisions, development covenants, profit-share arrangements and further land options.

Our client retains significant landholdings in the area. It has a strong interest in a successful and quality development that it can use as a spring-board for its own development plans. To achieve this, it was willing to put together an attractive package and share in the risks and reward of the development.

The agreement was concluded in lockdown. Despite the worsening economic news, both parties remained committed to their long-term vision.


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Highbury Shopping Mall, Birkenhead

Greenwood Roche acted for the purchaser in the acquisition of Highbury Shopping...

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Highbury Shopping Mall, Birkenhead

Greenwood Roche acted for the purchaser in the acquisition of Highbury Shopping Mall, Auckland. We are also assisting in the ongoing repositioning and redevelopment of the mall.


Our work included negotiating the terms of the agreement for sale and purchase, conducting an extensive due diligence investigation on all legal aspects of the property, instructing technical consultants and advising on various commercial property and business structuring matters.

We continue to assist with the new owner’s expansion and redevelopment plans at the mall, including construction, new leasing and strategic land acquisitions.


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Hunua 4 Tunnel Project

Greenwood Roche is assisting Watercare with this strategically significant project...

Hunua 4 Tunnel Project

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Hunua 4 Tunnel Project

Greenwood Roche is assisting Watercare with this strategically significant project, designed to ensure there is increased capacity in Auckland’s water network to meet the ever increasing demand.


More recently, the Tunnel is being constructed within Newmarket to connect to the Khyber Pass Reservoir, and is being directionally drilled under numerous parcels of land.

Hadleigh Yonge is leading Greenwood Roche’s team which is advising Watercare on various aspects of the project, including providing strategic advice, and negotiating and acquiring property rights.


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The Development of Drury

Greenwood Roche is assisting Watercare deliver bulk water and wastewater infrastructure...

The Development of Drury

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The Development of Drury

The Development of Drury

Greenwood Roche is assisting Watercare deliver bulk water and wastewater infrastructure to facilitate the development of Drury.


Watercare is working with the key stakeholders, who are each developing parts of Drury, to ensure that the bulk infrastructure is available in a timely manner to foster the great growth and development potential within Drury.
 
Hadleigh Yonge is leading Greenwood Roche’s team which is advising Watercare on the delivery of the bulk infrastructure, including providing strategic advice, negotiating infrastructure funding agreements, and acquiring property rights.


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Iwi Commercial Property

Greenwood Roche assisted Raukawa Property LP (now Iwi Commercial Property LP) with...

Recent Projects


Iwi Commercial Property

Greenwood Roche assisted Raukawa Property LP (now Iwi Commercial Property LP) with the preparation and negotiation of an agreement for sale and purchase, property due diligence investigations and acquisition of a commercial building in Tauranga


The property acquired by Iwi Commercial Property LP had a number of existing tenants, and the due diligence included reviewing those leases, as well as various construction contracts and associated warranties. We also negotiated a last-minute settlement retention for a number of potential defects discovered shortly before settlement


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News & Insights

Insights

Infrastructure Funding and Financing Act 2020: A New Approach to Infrastructure Funding

The Government has recently developed a number of initiatives, including the Urban Development...

Infrastructure Funding and Financing Act 2020: A New Approach to Infrastructure Funding

News & Insights

Infrastructure Funding and Financing Act 2020: A New Approach to Infrastructure Funding

The Government has recently developed a number of initiatives, including the Urban Development Act 2020 (UDA), the National Policy Statement on Urban Development (NPS-UD) and the COVID-19 Recovery (Fast-track Consenting) Act 2020, designed to support the functioning of urban environments and eliminate barriers to their creation throughout  New Zealand.


As part of this package of initiatives, the Infrastructure Funding and Financing Act 2020 (“Act”) passed its final reading on 22 July 2020 and received royal assent on 6 August 2020. The Act looks to ensure that a lack of funding at local government level does not continue to constrain development. Using the Act, developers can now access a new funding structure that will allow them to raise the funds and finance necessary for large-scale projects themselves (rather than rely on local government), with repayments made by future owners through rates on the developed land.

As noted by Auckland Mayor Phil Goff, “Traditional approaches to infrastructure funding and financing are not working. Constraints on council debt levels means viable infrastructure projects are postponed for years, despite the pressing need for more housing in these high-growth areas.”

The new funding model provides an alternative funding mechanism in a bid to accelerate the development of housing in particular. The Act received cross party support and is designed to complement existing funding tools available to local government.

Milldale Model

The financing structure set out in the Act is modelled on the structure utilised in the Milldale development in North Auckland. For Milldale, a special purpose vehicle (SPV) was set up to oversee a residential development project. The SPV raised initial capital from investors, proposing to pay them back by an annual ‘infrastructure payment’ added to the rates bill. Payments will initially be made by the developer and, in time, by the section owners.

The infrastructure payment obligations are secured by an encumbrance on each title, meaning the obligation to meet the payment runs with the land and binds any subsequent owners. In the Milldale example the payments are $650 + 2.5% interest per annum for apartments and $1000 + 2.5% interest per annum for homes and will last for 30 years.

While the Milldale development is still in the construction phase it is already clear that the model has enabled acceleration of the project and therefore faster delivery of affordable housing in Auckland.

How will The Act Work?

The Act adopts a very similar model to the Milldale model, by allowing the use of multi-year levies in large scale development that place the cost of infrastructure on those who will benefit directly from it. Levies will be able to be proposed for the provision or improvement of the following:
 

  • new water services infrastructure;
  • transport infrastructure;
  • community infrastructure or community facilities; or
  • environmental resilience infrastructure.
The process for creating an SPV and initiating levies will broadly involve the following:
 
  • The making of a detailed levy proposal to the government;
  • The proposal must include, among other matters, details of the SPV proposed, the financing structure and who will be responsible for construction;
  • The Minister for Housing and Urban Development as “recommender” will consider the levy proposal with reference to a number of factors and in consultation with the relevant local authorities and make a report to the responsible Minister (a Minister to be confirmed by the Prime Minister);
  • The report will include an assessment of the proposal, a recommendation and endorsement from the relevant levy authority;
  • The Responsible Minister may then recommend the Governor-General accept the levy (but may not amend the terms of the proposal).
Once a levy order has been made, the SPV will borrow funds to finance the infrastructure and set an annual levy that will be collected by the relevant local authorities on behalf of the SPV to pay back the borrowing. Vesting agreements will ensure that the conditions of any transfer of ownership of the infrastructure are clear. An encumbrance will secure payment of the levy by all future owners of the properties to benefit.

Commentary

Support for the Act has been reasonably wide as it is generally agreed that addressing infrastructure funding issues will enable faster provision of housing in areas where demand has been eclipsing provision. All major parties supported the Act, which then Infrastructure New Zealand CEO Paul Blair commented would “enable a bolder, more streamlined way of delivering new infrastructure for the benefit all New Zealanders”.

The Act will work with the direction in the NPS-UD that local authorities must have particular regard to plan changes for “out of sequence” (ie not zoned) development in some circumstances. In most cases “out of sequence” development will not be serviced by infrastructure, nor will the funding for requisite infrastructure be part of the local authority’s short to medium term plans. The combination of the NPS-UD and the Act will provide an avenue for development to take place in response to the ever-rising demand for housing outside of that already anticipated.

As summarised by the Minister for Urban Development:

“We need to remove restrictive planning rules that stop our city expanding on the fringes, which creates an artificial scarcity of land and drives house prices up, and remove height and density rules that stop the city growing up, which, effectively, rations floor space. Local authorities need to plan ahead and make room for growth.………

This bill is part of our Government's policy response to that public policy failure. It's one step towards fixing a broken funding and financing system to support more and better urban development. It’s complemented by the National Policy Statement on Urban Development gazetted this week, joint spatial planning work with local government in our six high-growth metro cities, and the Hon David Parker's review of the Resource Management Act.”
 
For any questions on the Act please don’t hesitate to contact Lauren Semple or Francelle Lupis for further information on the Urban Development Act, the NPSUD and the COVID-19 (Fast-Track Consenting) Act 2020, see here.


September 2020


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The National Policy Statement for Freshwater Management 2020

The National Policy Statement for Freshwater Management 2020 (NPS-FM) has recently been...

News & Insights

The National Policy Statement for Freshwater Management 2020

The National Policy Statement for Freshwater Management 2020 (NPS-FM) has recently been gazetted and will come into force on 3 September 2020. The NPS-FM will replace the current National Policy Statement for Freshwater Management 2014 (amended 2017) and will make fundamental changes to the way freshwater is managed in Aotearoa.


A prominent shift in the new NPS-FM is the incorporation of Te Mana o te Wai as the primary approach to managing freshwater. Te Mana o te Wai is defined in the NPS-FM as “a concept that refers to the fundamental importance of water and recognises that protecting the health of freshwater protects the health and well-being of the wider environment.  It protects the mauri of the wai.  Te Mana o te Wai is about restoring and preserving the balance between the water, the wider environment and the community”.  The NPS-FM identifies a hierarchy of obligations within Te Mana o te Wai that prioritises:
 

  • First, the health and wellbeing of water bodies and freshwater eco-systems.
  • Second, the health needs of people (such as drinking water).
  • Third, the ability of people and communities to provide for their social, economic and cultural wellbeing, now and in the future.
 The core principles of Te Mana o te Wai informing the NPS-FM and its implementation are:
 
  1. Mana whakahaere: the power, authority and obligation of tangata whenua to make decisions that maintain, protect and sustain the health and well-being of, and their relationship with, freshwater.
  2. Kaitiakitanga: the obligation of tangata whenua to preserve, restore and enhance, and sustainably use freshwater for the benefit of present and future generations.
  3. Manaakitanga: the process by which tangata whenua show respect, generosity, and care for freshwater and for others.
  4. Governance: the responsibility of those with authority for making decisions about freshwater to do so in a way that prioritises the health and well-being of freshwater now and into the future.
  5. Stewardship: the obligation of all New Zealanders to manage freshwater in a way that ensures it sustains present and future generations.
  6. Care and respect: the responsibility of all New Zealanders to care for freshwater in providing for the health of the nation.
The NPS-FM directs that freshwater is to be managed in a way that gives effect to the concept of Te Mana o te Wai – as articulated through the hierarchy and the principles.  The NPS-FM is also clear that regional councils must engage with communities and tangata whenua to determine how this concept applies to water bodies and freshwater ecosystems in the region, including through the development of the core “deliverables” under the NPS-FM including:
 
  • The development of long-term visions. Every council must include the long-term visions as objectives in regional policy statements. The long-term visions must be developed through engagement with the community and mana whenua about their long term wishes for the water bodies and freshwater ecosystems in the region.
  • Implementation of the national objectives framework. The national objectives framework is a process that requires regional councils to undertake a range of steps such as identifying freshwater management units and values, setting environmental outcomes and including them as objectives in regional plans, identifying and setting baseline states for attributes for each value, setting targets to support the achievement of environmental outcomes and prepare action plans to achieve those outcomes.
  • Developing objectives, policies, methods and criteria for any purpose relating to natural inland wetlands, rivers, fish passage, primary contact sites, and water allocation.
Alongside these requirements, the NPS-FM also prescribes a number of policies that must be included by all Regional Policy Statements and requires district and regional plans to align objectives with the environmental outcomes sought. Every local authority must give effect to the NPS-FM as soon as reasonably practicable.
 
This new NPS-FM is one of several streams of work in the freshwater space. The National Environmental Standards for Freshwater Management have also been introduced and will come into effect on the same day as the NPS-FM.  The standards will set requirements for carrying out activities that pose risks to the health of freshwater and freshwater ecosystems.
 
A full copy of the NPS-FM may be found on the Ministry for the Environment’s website here:
 


September 2020


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Major changes to residential tenancy legislation

The Residential Tenancies Amendment Bill 2020 was passed by Parliament on 5 August 2020...

Major changes to residential tenancy legislation

News & Insights

Major changes to residential tenancy legislation

Major changes to residential tenancy legislation

The Residential Tenancies Amendment Bill 2020 was passed by Parliament on 5 August 2020, and is awaiting Royal Assent. The Bill makes a number of changes to the Residential Tenancies Act 1986, which will affect all residential landlords and tenants.


Media have rightly focused on the reduced frequency of rental increases and changes to the termination of periodic tenancies, with these provisions being substantially amended for the first time in over 30 years.

Most residential property landlords will only be able to terminate a periodic tenancy:
 

  • by giving 63 days notice if the owner of the premises, or a member of the owner’s family (which includes extended family and whānau), requires the premises as their principal place of residence within 90 days after the termination date; or
  • by giving 90 days notice, but only for certain specified reasons. The list of reasons for terminating a tenancy is narrow, and the “no cause” ground has been removed.

Tenants will need to give at least 28 days’ notice to terminate a periodic tenancy – up from 21 days.

A late change was made to allow tenants to withdraw from a fixed-term or periodic tenancy on 2 days’ notice in circumstances of family violence. Any remaining tenants are then able to apply to the Tenancy Tribunal to be released from the tenancy on hardship grounds. A landlord who is physically assaulted by a tenant can terminate the tenancy by giving 14 days’ notice, but only if a charge is laid against the tenant for that assault.

Rent may not be increased within 12 months after the start date of the tenancy or 12 months after the last increase took effect. This applies even if the tenancy agreement (including for a fixed term tenancy) provides otherwise. As with the current Act, rent cannot exceed the market rent and cannot be charged more than 2 weeks in advance.

In addition:
 

  • landlords must allow tenants to undertake minor changes to the property (such as hanging pictures and redecorating), subject to certain conditions and provided that the changes do not require a building consent;
  • landlords must facilitate the installation of fibre connections to a property, although not if the installation will materially compromise the weathertightness, character or structural integrity of a building;
  • landlords must include the rent when advertising properties, and cannot hold auctions or solicit bids;
  • fixed-term tenancy agreements will automatically become periodic tenancies on expiry, unless both parties agree otherwise or in limited other situations;
  • to evict a tenant for anti-social behaviour (being harassment and activities causing non-minor alarm, distress or nuisance), the landlord will need to warn the tenant (in writing) at least 3 times in a 90 day period of that behaviour before seeking a Tenancy Tribunal order;
  • all tenancies (except social housing tenancies where the tenancy agreement prohibits assignment) are assignable with the prior written consent of the landlord, and that consent cannot be unreasonably withheld; and
  • financial penalties are increased, generally by 50% or more, but with significant additional penalties potentially imposed where a landlord has 6 or more tenancies.

The amendments also strengthen the Residential Tenancies (Healthy Homes Standards) Regulations 2019 (which set “healthy homes standards” for heating, insulation, ventilation, draughtiness, moisture ingress and drainage) by requiring that landlords retain information about compliance with the healthy home standards and provide that information to tenants on request.

The changes largely result from a public consultation process undertaken by the Ministry of Business, Innovation and Employment in 2018, and driven by the Government’s desire to make life better for tenants in light of home ownership being at a 60 year low and the number of rented properties exceeding 600,000. The changes therefore increase the rights of tenants, and reflect that tenants will often occupy rental accommodation for many years.

We advise a range of social housing and residential property investors on the acquisition, management and disposal of properties. If you would like further advice on the changes to the Residential Tenancies Act 1986, please contact our real estate and property team.

August 2020


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Urban Development Act 2020

The Urban Development Bill 2020 passed into legislation on 6 August 2020, becoming the...

Urban Development Act 2020

News & Insights

Urban Development Act 2020

The Urban Development Bill 2020 passed into legislation on 6 August 2020, becoming the Urban Development Act 2020 (Act).


The purpose of the Act (and the end to which its powers are to be deployed) is to facilitate urban development that contributes to sustainable, inclusive and thriving communities. The primary "beneficiary" of the Act is Kāinga Ora—Homes and Communities (Kāinga Ora), the Crown entity established in 2019 with the objective of contributing to sustainable, inclusive and thriving communities through, amongst other things, initiating, facilitating or undertaking urban development. 

Powers given to Kāinga Ora

The Act provides Kāinga Ora with a "tool-kit" of statutory powers, a number of which are, in effect, modified versions of existing development powers currently available to local government. Included in this "tool-kit" are powers relating to the planning and consenting of urban development projects, land acquisition, infrastructure development powers, and funding mechanisms.

Most powers apply only to "specified development projects", but some powers also apply to any urban development project initiated, facilitated or undertaken by Kāinga Ora. For example, Kāinga Ora is empowered to acquire land for any urban development project.

"Specified development projects"

The establishment of a "specified development project" allows Kāinga Ora to access the full suite of statutory powers to facilitate complex development projects. 

The process for establishing a specified development project under the Act can be initiated by either Kāinga Ora or the Ministers of Urban Development and Finance (acting jointly). In either case, Kāinga Ora must engage with; Māori entities with an interest in the project area, hapū associated with any former Māori land in the project area, and with key stakeholders including local authorities, Heritage New Zealand Pouhere Taonga and the operators of affected infrastructure. Kāinga Ora must also invite public feedback on the key features of the project. 

The Ministers may accept the recommendation that the project be established as a specified development project where it meets identified criteria, including whether the project objectives are consistent with the purpose of the Act and the national directions under the Resource Management Act 1991.

Kāinga Ora must then prepare and seek public submissions on a draft development plan for the project. The submissions on the draft development plan are reviewed by an independent hearings panel, which then recommends to the Minister for Urban Development whether to approve or amend the draft development plan.

Powers relating to "specified development projects"

Once the development plan takes effect:

  • Kāinga Ora becomes the ''consent authority'' for resource consent applications in the project area;
  • only designations that have been identified in the development plan have effect in the project area. Kāinga Ora then becomes the territorial authority for the purpose of considering notices of requirement lodged by other requiring authorities;
  • certain statutory powers relating to reserves, conservation interests, infrastructure and funding mechanisms may be exercised to further the project;
  • existing planning instruments under the Resource Management Act 1981 may be amended, overridden or suspended by the development plan. 

Comment

The Act is a key feature in the suite of Government-led initiatives designed to support the creation and delivery of well-functioning urban environments. While the tools available to Kāinga Ora under this Act are powerful, the process for accessing them provides ample opportunity for Ministerial decision-making and therefore judicial oversight. These consultative and decision-making requirements are likely to (appropriately or otherwise) limit the number of projects that will be suitable candidates for progression under the Act. However, for projects facing significant barriers, the Act can offer a comprehensive pathway to facilitate their development where they will contribute to sustainable, inclusive and thriving communities. Navigating the different stages of decision-making under the Act will require considerable skill and strategic nous.

For any questions on the Act and/or the COVID-19 Recovery (Fast-track Consenting) Act 2020, and how these alternative processes might be used or impact developments, please don’t hesitate to contact Lauren Semple, Francelle Lupis or Jeannie Warnock.

August 2020


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Honey Bees Preschool: The Law against Penalties Confirmed

On 5 June 2020, the Supreme Court issued its decision on an appeal by 127 Hobson Street...

Honey Bees Preschool: The Law against Penalties Confirmed

News & Insights

Honey Bees Preschool: The Law against Penalties Confirmed

Honey Bees Preschool: The Law against Penalties Confirmed

On 5 June 2020, the Supreme Court issued its decision on an appeal by 127 Hobson Street Limited (127 Hobson) against the Court of Appeal’s finding that a requirement to indemnify lessee Honeybees Preschool Limited (Honey Bees), for all financial obligations incurred under a lease as a result of 127 Hobson’s failure as lessor to install an elevator, was not an unenforceable penalty.


The issues on appeal involved an examination of the scope of the current rule against penalties in New Zealand and whether the clause in question constituted an unenforceable penalty.

Upholding the Court of Appeal finding, the Supreme Court has usefully re-stated the law on penalties in New Zealand.

Background

Honey Bees runs a childcare centre in central city premises leased from 127 Hobson. When the Deed of Lease was entered into, the parties also entered into a separate agreement under which 127 Hobson and its director agreed to install a second lift in the building to facilitate the arrival and departure of children at the central city high rise preschool.

This agreement included a provision whereby both 127 Hobson and its director agreed that in the event this second lift was not operational by 31 July 2016, Honey Bees would be indemnified against all rent and outgoings it incurred under the lease until its expiry.

The Supreme Court looked at the circumstances around entry into the overall transaction, examining why the separate second lift agreement was central to the lease’s suitability.

What is the scope of the rule against penalties in New Zealand? 

The Supreme Court summarised the rule against penalties as follows:

  • A clause will be an unenforceable penalty if a consequence is out of all proportion (exorbitant) to the legitimate interests of the innocent party in performance of the primary obligations.
  • Determining if the clause is an unenforceable penalty requires an objective exercise of construction, undertaken at the time of contract formation, and by reference to the terms and circumstances of the contract (including commercial context).
  • A legitimate interest to be weighed includes any consequences designed to protect the interests of the party in performance of the primary contractual term.
  • A party’s legitimate interests may extend beyond the loss caused by the breach as would be measured by a conventional assessment of contractual damages, i.e. the four corners of the contract.
  • Legitimate interests will not include objectives unrelated to the performance interest – including punishment – but deterring a breach can be a legitimate objective of the clause.
  • The respective bargaining power of the parties is relevant, including whether legal advice was obtained.
  • It is not always necessary for the court to assess damages – but there will be cases where such a monetary calculation will be the appropriate measure of the innocent party’s interest in performance.

Was the indemnity clause an unenforceable penalty? 

To answer this, the Court looked at Honey Bees’ legitimate interests and found that the only relevant interests were those that flowed from a failure to install a second lift on or before the due date. As the preschool was operating on the fifth floor of a busy high rise building, children and parents would be arriving and leaving within concentrated blocks of time. Honey Bees was looking to increase the capacity of its preschool over the forthcoming years. This was important to the commercial success of the venture.

The Court also found that there was no discrepancy in the parties’ respective bargaining powers.

The Court agreed with the Court of Appeal’s finding that, despite the ‘all or nothing’ nature of the indemnity clause, the consequences of the indemnity being triggered were not out of all proportion to the legitimate interests secured, and therefore the clause was not an unenforceable penalty.

Other issues

This Court also read the wording “all obligations” as applying to only “payment obligations”, i.e. Honey Bees was indemnified against all its financial obligations under the lease but the agreement did not give Honey Bees a right to breach its own obligations under the lease.

It is worth noting that the Court confirmed the general understanding in property law that rights of renewal of leases are in fact grants of a new lease, not an extension of the existing lease. Therefore the indemnity provided under the indemnity agreement only applied to the initial term of the lease, rather than a 24 year period including all renewals.
 
10 July 2020


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Overseas Investment – New Temporary Notification Regime: Treatment of Property Transactions and Process

The Overseas Investment (Urgent Measures) Amendment Act 2020 (Urgent Measures Act) came...

Overseas Investment – New Temporary Notification Regime: Treatment of Property Transactions and Process

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Overseas Investment – New Temporary Notification Regime: Treatment of Property Transactions and Process

Overseas Investment – New Temporary Notification Regime: Treatment of Property Transactions and Process

The Overseas Investment (Urgent Measures) Amendment Act 2020 (Urgent Measures Act) came into force on 16 June 2020, bringing into effect the temporary notification regime.


The manner in which the temporary notification regime applies to property transactions and how a change of control is calculated has now been clarified by the Overseas Investment Amendment Regulations 2020 (Regulations). In addition, the Overseas Investment Office (OIO) has recently published details of what information is required when making a notification to it and provided some additional guidance.

When is notification requirement triggered?

One of the key things achieved by the Regulations is to clarify when various property transactions require notification to the OIO.

The Urgent Measures Act provides in section 82(2)(b), that, an acquisition of property by an overseas person used in carrying on business in New Zealand that effectively amounts to a change in control of that business, as defined in the Regulations, is subject to the temporary notification regime. The Regulations define what is meant by a change in control of the business, and here take a novel approach. Change in control is to be assessed by reference to what proportion of the counterparty’s (i.e. the vendor’s or lessor’s) total assets are being acquired. A “change in control in relation to the acquisition of property used in carrying on a business” is where the value of the property being acquired is more than 25% of the value of all New Zealand property owned by the person from whom the property was acquired, as assessed immediately before the acquisition. If this threshold is exceeded, the transaction must be notified.

This means that both the purchase of land, as well as the entry into a lease (being an acquisition of an interest in land), will be subject to the temporary notification regime and require notification to the OIO if they involve more than 25% of the counterparty’s total assets.

The value of property is to be determined by reference to the most recent financial statements, accounting records and all other circumstances which affect the value of the property. Reliance may be placed on valuations that are reasonable in the circumstances.

Further, value is to be determined by reference to the assets of the actual counterparty, not its related companies. If a particular property asset is held in a special purpose vehicle, as is often the case, regard cannot be had to the total value of group assets.

It is quite possible that a counterparty will resist having to provide its confidential financial information. If so, one solution would be to include a warranty that the threshold is or is not met, and if need be, proceed, or not proceed, to notification accordingly. The OIO has indicated it will be providing further guidance here shortly.

Incorporating companies

One thing to watch out for in relation to the application of the notification regime to business transactions generally is that it covers any acquisition of securities by an overseas person. Strictly speaking, this would have covered even the uncontroversial incorporation of a New Zealand subsidiary of the overseas person, without any business transaction occurring.  After we raised this anomaly with the OIO, it has now been clarified by the enactment of the Overseas Investment Amendment Regulations (No 2) 2020 that a mere company incorporation does not require notification to the OIO.

A few process comments

If it is determined that a transaction is subject to the temporary notification regime, notification to the OIO is to be made prior to giving effect to a transaction. A transaction may be entered into before notification, provided the transaction is conditional on receiving a direction order from the Minister. Transactions entered into before 16 June 2020 are not subject to the temporary notification regime at all.

The notification process is completed online via an online form on the OIO’s website. The information required includes:

  • details of the overseas investor (including an ownership structure diagram);
  • copies of the passport identity page for each individual director or trustee of the acquiring entity or individual involved in the transaction;
  • details of the transaction;
  • details of the business being invested in or the interest being acquired;
  • the value of the assets or interest being acquired; and
  • financial statements for the previous two financial years.

This information must be submitted with the online form and cannot be sent separately to the OIO. No fee is payable.

Unless the OIO makes appropriate changes to its online form, the process for completing it will remain clunky. All the information needs to be gathered, and ready for upload as required, in advance. No provision has been made for the counterparty to submit its financial information privately, on a confidential basis. There is no ability to provide additional material (for example a statement that the counterparty refuses to provide financial statements, or a letter explaining any necessary departure) and there is a tick-box requirement that the party submitting confirms that all required information has been included in the notification (without which the online submission will not work).

Once a transaction has been notified, the OIO will conduct an initial review and make a recommendation to the Minister of Finance, who will decide whether the transaction is contrary to the national interest. No delegation of this decision-making power has been made, regardless of transaction value, and if all parties comply then it is possible to foresee a bottleneck arising at the ministerial level. This initial review is expected to be completed within 10 working days, although the legislation does actually provide for the initial review to take up to 40 working days, with provision for extension by the Minister for a further 30 working days.

A notified transaction cannot progress until a direction order is issued. The Minister may:

  • make a direction order that no conditions are imposed (and therefore the transaction may proceed);
  • make a direction order imposing conditions on the transaction; or
  • make an order prohibiting the transaction from being given effect.

If it is found that further assessment is necessary, the transaction will be subject to a detailed review against the national interest test. This is a discretionary power, and guidance on this test notes that considerations are to be given to a range of factors and the likely impact of the investment.

The OIO expects the majority of transactions to be able to proceed without any intervention. However, as the notification requirement effectively amounts to a temporary ministerial power of veto over transactions, at the very least resulting in potentially significant delay, the new regime is of concern to business.

Thankfully the new emergency notification regime is only temporary and an assessment of the regime is to commence by the end of July to ensure that classes of transactions subject to the regime are not broader than reasonably necessary.  Treasury has advised this review will be completed after the 2020 General Election.  Further, the emergency notification regime will be reviewed by the Minster at 90 day intervals to ascertain whether the effects of the pandemic justify the regime remaining in place. Where it is determined, the emergency notification regime is no longer required, this will be replaced by a permanent call-in power (see our previous article here for details of this).  The first 90 day review has now been completed, and on 1 September Treasury issued a statement advising that New Zealand would retain the temporary notification regime for a further 90 days.  The next statutory review is due on 28 November 2020.   Following the initial review the OIO confirmed it had received 102 notifications, with three being called in by the Associate Minister of Finance for further assessment.  Of these three, two transactions have been allowed to proceed, and one is currently being reviewed.  We will watch with interest the outcome of this assessment.

Please contact Brigid McArthur or one of our lawyers in our Property team if you would like help on interpreting the temporary notification regime and the recent changes to the Overseas Investment Act.

10 July 2020 (updated September 2020)


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Decision not to offer surplus PWA land back to a former owner was not lawful

Navigating the Public Works Act 1981 (PWA) can be difficult for both landowners and the...

Decision not to offer surplus PWA land back to a former owner was not lawful

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Decision not to offer surplus PWA land back to a former owner was not lawful

Decision not to offer surplus PWA land back to a former owner was not lawful

Navigating the Public Works Act 1981 (PWA) can be difficult for both landowners and the government agencies charged with developing public works, especially when divesting surplus land. Recently, the Court of Appeal provided some clarity about the obligation to offer surplus land to its former owner, when that former owner is a company which has been removed from the companies register.


In Aztek Limited v Attorney-General [2020] NZCA 249, the Court of Appeal held that, even though the company former owner had been removed from the companies register, the chief executive of Land Information New Zealand (LINZ) should have enquired into the ability to make an offer to that company. The chief executive’s decision, made in February 2011, that it would have been “impracticable” to sell the land to that company was set aside and the chief executive is now required to reconsider that decision.

The case relates to properties acquired from Aztek Limited for the “Avondale Extension” (later known as the Waterview tunnel project) by agreement in 2005. As Aztek’s only significant asset was that land, the directors of the company had ceased filing annual returns and the company was removed from the companies register in March 2009. In November 2010, NZTA decided that the land was no longer required for the Avondale Extension and, on 21 February 2011, the chief executive of LINZ approved an offer-back exemption under section 40(2)(a) of the PWA. This section provides an exemption to the standard rule that land must be offered for sale to its former owner when it would be “impracticable” to do so. The reason given was that the company had been removed from the companies register.

Aztek was restored to the companies register in 2015 after the directors of the company discovered that the land had been declared surplus. The restoration of the company, in effect, brought it back to life as if it was never removed from the companies register.

The Court of Appeal relied on both the wording and purpose of section 40 of the PWA to decide that the chief executive of LINZ should have enquired with the shareholder of the company as to whether it was possible for the company to be restored to the companies register in order to receive an offer of the land. That enquiry should have been made between the decision that the land was surplus and the decision that a sale to the former owner was “impracticable”. In this case, those decisions were made at the same time.

The Court relied on a number of previous decisions about the rights of former owners under the PWA and concluded that the PWA is designed to ensure that, so far as practicable, land is returned to the persons from whom it was acquired as “that is the right thing to do”. The Court held that, in this case, it was both reasonable and practicable to advise the shareholder of the company of the possibility of receiving an offer if the company was restored to the companies register.

This was a case where the company was closely-held, and the company had been removed from the companies register less than two years before the land became surplus. The reasonable performance of the chief executive’s duties could have resulted in the company being restored to the register in order to receive an offer in the months following the November 2011 decision that the land was surplus.

Restoration to the register is a relatively straightforward process under sections 328 to 331 of the Companies Act 1993 where the relevant ground for removal did not exist (generally, that the company had ceased to carry on business) and a useful provision in a variety of scenarios, both inside and outside of a liquidation.

The PWA remains a complex piece of legislation, which is well overdue for reform, with the rights and obligations of landowners and governmental agencies becoming more and more governed by caselaw. In this particular case, it is not yet known if an appeal to the Supreme Court will be sought by the Crown.

A number of our lawyers regularly provide advice on the PWA and one of our senior consultants, John Greenwood, advised Aztek and its shareholder on this matter. If you would like further information about this or any other PWA matter, please contact one of our property lawyers. Our corporate team can also assist with restoration to the companies register or other company law matter.

July 2020


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Covid-19 Recovery (Fast Track Consenting) Bill

Another tool in the Government’s armoury towards Covid-19 related economic recovery...

Covid-19 Recovery (Fast Track Consenting) Bill

News & Insights

Covid-19 Recovery (Fast Track Consenting) Bill

Covid-19 Recovery (Fast Track Consenting) Bill

Another tool in the Government’s armoury towards Covid-19 related economic recovery is a step closer this week with the introduction of the Covid-19 Recovery (Fast-track Consenting) Bill. Styled in part on the recovery legislation we saw after the Canterbury and Kaikōura Earthquakes, the legislation seeks to circumvent the Resource Management Act 1991 in an attempt to speed up the consenting of projects with a view to aiding employment and catalysing economic recovery.


For the 11 “listed projects” contained within the Bill itself, the pathway is relatively clear. These projects are already on the fast track and almost (we think!) assured of consent with the expert consenting panel apparently only having to satisfy itself that the grant of consent or designation is not inconsistent with any national policy statement (including a New Zealand coastal policy statement) or Treaty settlement legislation and then determining what conditions should attach. The expectation in the Bill appears to be that these projects will be consented in short order, subject to the relevant applicant completing the necessary applications. The Bill sets out some reasonably hefty requirements for those applications, but how that will translate into practice remains to be seen.
 
For roading and rail projects, KiwiRail and NZTA obtain some limited permitted works powers in respect of existing public infrastructure works (subject to specific performance standards included in the Bill), with local councils being given a monitoring role to ensure accountability. By way of an Order in Council on recommendation from the Minister for the Environment, Kāinga Ora, the Ministry of Housing and Urban Development and local authorities may also receive permitted works powers in limited circumstances.
 
For everyone else, a pathway exists to get on the fast track bandwagon. Provided certain criteria are met, any person can apply to the Minister for the Environment to have a project referred to the expert consenting panel. With a maximum 70 day decision-making timeframe for most projects, no notification requirements, potentially no hearing and no appeals (other than on points of law), it’s a handy process if you can get it. Although getting it may well be the trick! The Bill gives the Minister almost complete discretion as to whether to refer a project on to the consenting panel and this will assist to ward off successful judicial review (although may not stop it as a tactical stall).  
 
Again, however, the Bill provides for a detailed application and assessment of environmental effects to reach that determination, which will have implications for all applicants. While the Bill indicates that an application need only provide a “general level of detail”, working out what the Minister will actually need to see to be convinced of the merit of the application will be critical – particularly given the substantial number of applications that are anticipated and the requirement for the Minister to invite comment on the application from a range of other Ministers.
 
There is no doubt the legislation is laudable in its attempt to urgently consent projects that can deliver jobs and catalyse the economy. However, in our experience, “fast tracks” are not the panacea they initially appear to be. Our experience acting for the government recovery agencies under the Canterbury Earthquake Recovery Act 2011 and the Greater Christchurch Regeneration Act 2016 is that processes that require Ministerial decisions can be slowed by myriad factors including the wider political environment. Even under the current streamlined plan processes in the Resource Management Act 1991, the Ministerial decision to agree the “fast track” or otherwise has taken, on average, seven months over the six applications so far approved (before the actual process for council or judicial decision-making even starts). In a similar vein, it is our experience that the political goodwill expended on these processes can wane with time and particularly after the first judicial review (especially if the Minister is reprimanded by the Courts).
 
The legislation is well-constructed and could definitely be a game-changer for many projects, with a resultant stimulus to the economy. The question is whether it will be more successful than its predecessors in actually producing the promised time-savings. Navigating the necessary Ministerial approval processes will require considerable skill and strategic nous. Retaining advisors well-versed in these processes will be critical, particularly in the early stages where all potential applicants are endeavouring to work out what the legislation requires.
 
If you would like more information on whether your project might be assisted by this new process, please feel free to contact us. We expect demand for the Minister’s attention under this legislation to be high and providing a compelling case early will be a significant advantage.

June 2020


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