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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

New Hamilton office for Accident Compensation Corporation

Tainui Group Holdings and the Accident Compensation Corporation have announced the...

New Hamilton office for Accident Compensation Corporation

Recent Projects

New Hamilton office for Accident Compensation Corporation

New Hamilton office for Accident Compensation Corporation

Tainui Group Holdings and the Accident Compensation Corporation have announced the development of a $50m-plus Hamilton office complex.


Greenwood Roche lawyers Bob Roche, Sam Green and Jane McDiarmid are assisting ACC with a significant office consolidation project, which has recently reached a milestone with the conclusion of a development agreement for a new office building in Hamilton.

At each of ACC's main hubs, Dunedin and Hamilton, we are advising ACC on the RFP process for new office accommodation, development agreements for the design and build of new office buildings and the deeds of lease. Each building will have office space of approximately 8,500 square metres and will be significant construction projects for these cities.

The new Hamilton building will be developed by Waikato-Tainui and will be located on the corner of Collingwood Street and Tristram Street. The building is designed as a state of the art, low-rise, three-pavilion building and will be a substantial boost for the Hamilton CBD.


Specialist expertise

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Ministry of Business, Innovation and Employment – New National Office Redevelopment

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Ministry of Business, Innovation and Employment – New National Office Redevelopment

Ministry of Business, Innovation and Employment – New National Office Redevelopment

At over 20,000m2 of space, the redevelopment of a landmark Wellington building has provided the New Zealand Government’s largest Ministry with a substantial new National Office.


Greenwood Roche has successfully assisted the Ministry for Business, Innovation and Employment in the redevelopment and lease of MBIE’s new National Office premises in Wellington.
 
Greenwood Roche has continued to provide advice to MBIE throughout the course of the redevelopment, including assisting with the sale of the building to an NZX-listed property investment company during the project.
 
MBIE’s new National Office is one of a number of substantial redevelopment projects within Wellington on which Greenwood Roche has acted.


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New National Head Office for Transpower

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New National Head Office for Transpower

Greenwood Roche represented Transpower New Zealand Limited in relation to the redevelopment and lease of Transpower’s future national head office at Boulcott Street, Wellington.


Transpower plans, builds, maintains and operates New Zealand’s high voltage electricity transmission network. The new premises will house around 500 staff and the 24/7 control room for the National Grid.  At approximately 8,400m2, the Boulcott Street transaction is one of the largest commercial office leasing deals in New Zealand this year.

The Greenwood Roche team included partner John Greenwood and principal Doran Wyatt, both based in the firm’s Wellington office.


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New National Head Office for Ministry of Education

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New National Head Office for Ministry of Education

New National Head Office for Ministry of Education

Greenwood Roche represented the Ministry of Education on the redevelopment and 15 year lease of the Ministry’s new national head office at 33 Bowen Street, Wellington.


At approximately 13,100m2, the Bowen Street transaction was a full building lease and one of the largest commercial office leasing deals in New Zealand for the year. Greenwood Roche assisted the Ministry on all aspects of the negotiation and documents for the transaction, which included substantial refurbishment works, a seismic upgrade for the building and an integrated fitout.

The Greenwood Roche team for the deal were partner Jeannie Warnock and principal Doran Wyatt, both based in Wellington.
 


Specialist expertise

Key lawyers involved

Similar projects
Ministry of Business, Innovation and Employment – New National Office Redevelopment New National Head Office for Transpower Redevelopment of 56 The Terrace, Wellington

Recent Projects


Redevelopment of 56 The Terrace, Wellington

Kiwi Income Property Trust, one of the country’s largest listed property investors, is undertaking a $67 million redevelopment of its property at 56 The Terrace, Wellington, for lease by the Ministry of Social Development.


We are advising Kiwi Income Property Trust on this project. Our work has included advising on the development agreement and the 18 year deed of lease with the Crown and preparing and advising on the construction contract for the development works.


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New Co-located Processing facility in Palmerston North

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New Co-located Processing facility in Palmerston North

New Zealand Post has recently commenced operations at its new Manawatu Co-located Processing Facility.


Comprising over 7,000 square metres including a mail processing warehouse, staging interchange areas, and associated office accommodation (and a combined investment of over $10 million), the facility houses NZ Post’s mail processing functions for the entire lower North Island.

The facility is situated in the heart of Palmerston North’s main industrial area, and is strategically convenient to all major transport systems in the city (including the airport, state highways and rail network).

Greenwood Roche assisted NZ Post on the development, construction and leasing aspects of the facility. The development agreement provided for delivery of tenant works as a variation to the landlord's main contract and early engagement of the Main Contractor on a fixed margin open book basis. Both features enabled the project to be completed seamlessly to a tight schedule while maintaining the appropriate distribution of risk and responsibility between the parties.
 


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Watercare’s new head office

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Watercare’s new head office

Watercare’s new head office

Watercare Services Limited is responsible for providing water and wastewater services to the greater Auckland region, and employs a large number of people across many different teams.


We acted for Watercare in relation to its new head office premises located in Newmarket, Auckland. This was a significant project, involving the negotiation of a comprehensive redevelopment agreement and subsequent deed of lease, and further extensive advice in relation to Watercare’s ability to terminate its existing tenancies at that time.


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Redevelopment of 56 The Terrace, Wellington Sale, redevelopment and leaseback of New Zealand Post House

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Sale, redevelopment and leaseback of New Zealand Post House

As part of New Zealand Post’s strategy to release capital from its corporate properties, it sold the landmark New Zealand Post House in Wellington to listed commercial property company Argosy Property in 2013.


We acted for New Zealand Post on the sale and leaseback of New Zealand Post House and on the negotiation of a comprehensive development agreement committing the purchaser to undertake a $40 million extensive redevelopment of the building.
 
The sale, for $60 million, was one of the single largest commercial real estate deals completed in Wellington in 2013.


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Watercare’s new head office

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Hagley Oval - Section 71 Proposal

On 23rd December 2018 Hon Poto Williams, the Associate Minister for Greater Christchurch...

Hagley Oval - Section 71 Proposal

Recent Projects

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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St Johns Retirement Village

Francelle Lupis and Amelia Alden recently assisted Summerset Villages (St Johns)...

Recent Projects

St Johns Retirement Village

St Johns Retirement Village

Francelle Lupis and Amelia Alden recently assisted Summerset Villages (St Johns) Limited in obtaining resource consent for a large retirement village in St Johns, Auckland.


The application was heard in the Environment Court, where Judge Smith, Commissioner Gysberts and Commissioner Prime held the consent as proposed “is appropriate and properly balances the interests of intensification with the need for compatibility with the residential environment and the impact on visual amenity”.
 
The village will range between two and six storeys and contain 328 units made up of independent living units, serviced units and care / dementia rooms.


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City Rail Link

Greenwood Roche is acting for the Link Alliance on New Zealand’s largest ever...

City Rail Link

Recent Projects

City Rail Link

City Rail Link

Greenwood Roche is acting for the Link Alliance on New Zealand’s largest ever transport infrastructure project to deliver the country’s first underground railway, connecting Auckland’s existing train networks and transforming the city’s public transport system.


The City Rail Link is a 3.45km twin tunnel underground rail link that will run up to 42 metres beneath downtown Auckland to connect Britomart Station with a redeveloped Mount Eden Station.  The project also creates two new underground stations – Aotea Station, at Wellesley and Victoria Streets, and Karangahape Station near Mercury Lane and Beresford Square.

The Link Alliance consortium, who will deliver the main stations and tunnels for this project, comprises:

- City Rail Link Limited
- Vinci Construction Grands Projects S.A.S
- Downer NZ Limited
- Soletanche Bachy International NZ Limited
- WSP New Zealand Limited
- AECOM New Zealand Limited
- Tonkin + Taylor Limited

Amy Rutherford is fronting the Greenwood Roche team on this project, which is expected to run through until 2024 and will include the procurement of approximately 600 different packages with both domestic and international subcontractors, suppliers and consultants.  Greenwood Roche is advising the Link Alliance on various aspects of the City Rail Link Project, including providing strategic project delivery advice, preparing the procurement suite of contracts and assisting with downstream negotiations and engagements.

 


Specialist expertise

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Ōtākaro Avon River Corridor Regeneration Plan Approved

On Friday 23 August, the Minister for Greater Christchurch Regeneration announced...

Recent Projects


Ōtākaro Avon River Corridor Regeneration Plan Approved

On Friday 23 August, the Minister for Greater Christchurch Regeneration announced her approval of the Ōtākaro Avon River Corridor Regeneration Plan.  The Plan was developed by Regenerate Christchurch under the Greater Christchurch Regeneration Act 2016.  It outlines the vision and objectives for the future of the 600ha Ōtākaro Avon River Corridor (the former residential red zone), and directs the inclusion of an accompanying planning framework to enable the realisation of that Vision. 


This area is significant in many ways for Christchurch/Otautahi.  It has been and continues to be an area comprising sites and geographical features of cultural importance to Te Rūnanga o Ngāi Tahu and Te Ngāi Tūāhuriri Rūnanga.  The area also comprises various other sites of historical significance to Christchurch/Ōtautahi and is traversed by the Ōtākaro Avon River which is itself a key feature of the city’s identity and urban framework. In developing this Plan Regenerate Christchurch has therefore sought to acknowledge the significance of this area to the wider Christchurch/Ōtautahi community, as well as working with the environmental constraints and opportunities that it provides.  
 
The process has taken time and has not been without its challenges – the size and geographical constraints of the area, the various interests and feedback from stakeholders, community groups and members of the public, and the uncertainties particularly around future implementation have all been matters to carefully consider and address.  The Plan’s vision and objectives and the accompanying framework for the Area are broad.  While they have strong focus areas (including ecology, recreation, economic opportunity and community connection), they also seek to recognise that the regeneration of this Area will take time, and that new ideas, new technology and new activities which are not currently contemplated should be allowed to take place.  The vision and objectives therefore operate as a touchstone against which future decisions can be made – ensuring a clear aspiration for the area while still allowing flexibility to adjust to a changing future. 
 
The approval of the Plan by the Minister (and the Ombudsman’s recent finding as to its legal and evidential rigour) is a significant endorsement of the work done by the Regenerate Christchurch team on this project.   Greenwood Roche lawyers, Lauren Semple and Rachel Murdoch have been privileged to advise Regenerate Christchurch on the development of this Plan, the exercise of its powers under the Act in respect of this and other projects, and its general regeneration mandate.  It is extremely satisfying to see the Plan become operative and attention now turn to its implementation.


Key lawyers involved

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Kāinga Ora–Homes and Communities in Mount Cook, Wellington

Greenwood Roche recently secured resource consent to re-develop an existing complex...

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Kāinga Ora–Homes and Communities in Mount Cook, Wellington

Greenwood Roche recently secured resource consent to re-develop an existing complex for Kāinga Ora–Homes and Communities in Mount Cook, Wellington


The new development will replace the original structures that were built in the 1950’s, with four new fit-for-purpose buildings that will provide long-stay accommodation for up to 218 social housing tenants.
 
Twenty of the units are to be reserved to accommodate residents receiving support through the Housing First programme. This is a government-led programme to house and support people who have been homeless for a long time, or are homeless and face multiple and complex issues. The development will also include a community space, a residents support space and on-site staff.
 
This re-development comes as part of a nationwide $5.6 billon build programme being undertaken by Kāinga Ora to address the housing shortages across New Zealand, but particularly in the biggest urban centres where those shortages are most acute.

Greenwood Roche's team on this project was led by Lauren Semple and Rachel Murdoch.


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One Billion Trees Programme

Greenwood Roche is assisting the Crown in the preparation and registration of Forestry...

One Billion Trees Programme

Recent Projects

One Billion Trees Programme

One Billion Trees Programme

Greenwood Roche is assisting the Crown in the preparation and registration of Forestry Rights as part of the One Billion Trees Programme developed by the Government.


The Government has set a goal to plant one billion trees by 2028.  Progress towards achieving this target is well underway. 

The One Billion Trees Programme supports New Zealand’s commitment to mitigating the effects of climate change.  By absorbing carbon dioxide, tree planting reduces the impact of greenhouse gases.  As well as addressing the impacts of climate change, the Programme aims to create increased sustainable regional development, increased employment, optimise land use, support Māori values and aspirations, protect the environment and support New Zealand’s transition to a low emissions economy. 

The programme involves the planting of both permanent trees and plantation forests.  The Crown estimates that commercial foresters will plant 500 million trees by 2028.  The Crown is issuing direct landowner grants and entering into partnership projects to help plant the other 500 million trees.  For example, funding will be allocated to research and workforce initiatives.  To help achieve the target, Crown Forestry is also entering into joint ventures and forestry rights to plant commercial forestry on privately owned land.

Greenwood Roche is involved with the preparation and registration of Forestry Rights over privately owned land.  As at the end of November 2019, the Crown has entered into over 40 Forestry Rights covering over 20,000 hectares with more being negotiated and finalised.  Under the Forestry Rights, the Crown plants, manages and harvests trees on the land and pays an annual rental to the landowner.  An estimated 18,443,000 trees will be planted over the next two years under the Forestry Rights signed to date.


Key lawyers involved

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Ōtākaro Limited – East Frame (Pūtahi Whakaterāwhiti)

Greenwood Roche has assisted in the subdivision and transfer of Christchurch’s...

Ōtākaro Limited – East Frame (Pūtahi Whakaterāwhiti)

Recent Projects

Ōtākaro Limited – East Frame (Pūtahi Whakaterāwhiti)

Ōtākaro Limited – East Frame (Pūtahi Whakaterāwhiti)

Greenwood Roche has assisted in the subdivision and transfer of Christchurch’s largest and most central residential development – the East Frame.


Following the Christchurch earthquakes, land was compulsorily acquired by the Crown which gave us the unique opportunity of creating a vibrant, functional and liveable city.  The “East Frame” is an anchor project comprising a 14 hectare residential area located at the east of the Christchurch central business district.  Half of the East Frame development consists of medium density residential living for approximately 2,000 people.  The remainder comprises streets, open spaces and paved areas.  The East Frame holds the third largest open space in central Christchurch - Rauora Park.  
 
Greenwood Roche has assisted Ōtākaro Limited with the subdivision, transfer and other property related aspects of the East Frame including Rauora Park.


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News & Insights

Insights

COVID-19 and No Access in Emergency – Commercial Leases

The global pandemic caused by the novel coronavirus known as COVID-19 has caused rapid...

News & Insights

COVID-19 and No Access in Emergency – Commercial Leases

The global pandemic caused by the novel coronavirus known as COVID-19 has caused rapid and widespread change and disruption as countries respond to the threat of COVID-19. 

In New Zealand, we rapidly progressed from the Prime Minister’s announcement of a COVID Alert Level System on 20 March 2020, to the declaration of a national state of emergency and the implementation of COVID-19 Alert Level 4 restrictions, which resulted in an effective “lock-down” and the closure of all premises not required for “Essential Businesses” by 11:59pm on 25 March 2020. 

The initial starting point will be the provisions of the relevant leases.  While there are a number of different forms of lease in use in New Zealand, the most commonly used form is the Auckland District Law Society’s Sixth Edition 2012 Deed of Lease (ADLS Lease). The ADLS Lease contains express provisions to cover situations where no access is available to the leased premises as a result of an emergency.  However, many other forms of lease (including earlier editions of the ADLS Lease) do not directly cover this situation.


ADLS Lease

The current 2012 “Sixth Edition” of the ADLS Lease was introduced as a response to the Christchurch earthquakes, where the emergency red-zone cordon in the central city prevented tenants from being able to access their premises.  The cordon meant that access to buildings was extremely limited or impossible, regardless of whether or not any physical damage was suffered.  Where there was little or no physical damage, usual entitlements to rent abatements did not apply and leases did not terminate under the damage or destruction provisions.

Clauses 27.5 and 27.6 - No Access In Emergency - were introduced to deal with this situation and provide for an abatement of rent and outgoings and, potentially an entitlement to terminate the lease.  The clauses apply where there is an “emergency” and the tenant is unable to access the premises to fully conduct their business from the premises because of “reasons of safety of the public… or the need to prevent reduce or overcome any hazard, harm or loss that may be associated with the emergency including… restriction on operation of the premises by any competent authority.” An “emergency” includes a situation resulting from an “epidemic” and in our view the COVID-19 pandemic and the Government response to it will qualify as an “emergency”.

Access to the premises to fully conduct the Tenant’s business

For the clause to apply, the tenant must also be unable to access the premises to “fully conduct” their business from the premises.  This is arguably different to the permitted or business use under the lease.

Under the Government’s Alert Level 4 restrictions means that only certain “essential businesses” can operate from their premises.  An essential business is one that is essential to the provision of the necessities of life, such as pharmacies, and businesses supporting them, such as medicine manufacturers – the details are as described on the covid19.govt.nz internet site.

Most business, however, will not be able to operate from their premises at all or, in the case of essential businesses, will only be able to do so in a limited way.  Where this is the case, the Tenant will not be able to access the premises to “fully conduct” their business and the No Access In Emergency provisions will apply.

What happens when the No Access In Emergency provisions apply

Where the No Access In Emergency provisions apply, clause 27.5 provides that a “fair proportion of the rent and outgoings” ceases to be payable for the period in which the Tenant is unable to access the premises to “fully conduct” its business.

The Alert Level 4 restrictions commenced at 11:59 pm on 25 March 2020, so it is generally taken that these affected businesses on 26 March.  At this stage the Alert Level 4 “lockdown” is due to last for four weeks, but the Prime Minister has indicated that this level of restriction may continue beyond that period, at least for some parts of the country.

What is a “fair proportion” of the rent and outgoings?

A fair proportion will vary depending on the nature of the Tenant’s business, their premises and the terms of the lease.  There will be a range of possibilities.

At one end of the spectrum will be Tenants, such as retailers, who cannot access their premises to conduct their businesses.  However, even in those circumstances, it will at least be arguable that the premises continue to be used for the conduct of the businesses by way of storage and warehousing of stock in trade.  In addition, parts of the premises may remain useable remotely, such as IT servers.  Where that is the case, there will also be an argument that the extent to which the conduct of the business continues remotely should be taken into account.

The abatement must also be “fair”.  This might well mean that an assessment of an abatement goes beyond consideration of only the Tenant’s business, and consider what may be more broadly “fair” as between landlord and tenant.  It may be that obligations a landlord still has to perform under the lease will be relevant, such as payment of insurance.  For reasons such as this, it may also be the case that there is difference between a fair proportion of rent and a fair proportion of outgoings.

As what constitutes a fair proportion of rent and outgoings will vary depending on the individual circumstances, the landlord and tenant will need to try and negotiate to reach agreement on what represents a fair proportion.  If the parties cannot agree, the ADLS Lease requires that parties first attempt to resolve any dispute by agreement and mediation (provided that both parties agree to mediation).  If the dispute is not resolved by agreement or mediation it will proceed to arbitration.

Termination

In addition to the rent abatement in clause 27.5, clause 27.6 provides either party may terminate the lease by giving 10 working days’ notice where the Tenant is unable to gain access to the premises for the specified “No Access Period” set out in the First Schedule or the party giving notice can establish with ‘reasonable certainty’ that the Tenant will be unable to gain access during the period.  The standard No Access Period in the ADLS Lease form is 9 months, but this is subject to negotiation between the parties and, as a result, will vary depending on the lease.

Other Leases

The situation for other forms of lease is less certain.  Bespoke lease forms may address no access issues using a different approach, while older leases (i.e. leases that were entered into pre-2012/2013 and including earlier versions of the ADLS Lease, such as the Fifth Edition 2008), generally do not include an express right to a rent abatement in the current circumstances, unless a bespoke “no access” or force majeure clauses was included in the further terms of lease.  This reflects “no access” clauses becoming a feature of lease drafting following the Christchurch earthquakes.

Where the lease does not include no access provisions, tenants may attempt to raise arguments based on the doctrine of frustration.  Frustration allows a contract to be avoided where the obligations have become impossible to perform due to the occurrence of certain events that are beyond the control of the parties to the contract.  However, establishing frustration of a lease is likely to be very difficult, as the tenant would need to argue that the “common object” of that lease can no longer be achieved. Additionally, case law resulting from the Canterbury earthquakes indicates that the Courts would be very hesitant and generally unwilling to get involved in a claim for frustration for a commercial lease, particularly where the timeframes around the restrictions are so uncertain.

Should a tenant pay April’s rent?

We are seeing a number of tenants taking an aggressive approach to this issue by advising landlords that they will be withholding all rent and outgoings.  Whilst that approach may represent a litigator’s preferred option, our view is that this approach will be counter-productive in the long-run.  In all but the most clear-cut cases, landlords will have good legal arguments available to them that some rent and outgoings should be payable during the lockdown period.  If a tenant simply does not pay, it will open itself up to allegations of breach and, potentially, termination of its lease.

In addition, by simply stopping payments without prior consultation, tenants are likely to simply annoy their landlords, resulting in any goodwill being eroded and landlords taking a more combative and robust approach than might otherwise be the case.

On this basis, our view is that where tenants can afford to pay a fair proportion of their rent and outgoings, they should do so – if that assessment cannot be undertaken in time, they should reserve their rights to review the contractual position and seek a refund later.  If there are concerns about the solvency of a landlord, then tenants may perhaps pay amounts into a solicitor’s trust account (or other escrow) pending resolution of the matter as a show of good faith and good financial standing.

Of course, many tenants are in a difficult position and unable to pay.  In those circumstances, we are advising tenants to talk openly to their landlords about their situation.  We are seeing many landlords prepared to agree to non-payment or deferral in order to support vulnerable tenants.  Again, this can potentially be done on a without prejudice basis – buying time for the parties to have a sensible discussion about the permanent solution. However, where a tenant starts from the position that it will not pay, a landlord may be significantly less accommodating.

What should a landlord do if its tenants do not pay rent?

As mentioned above, in almost all cases, there are good arguments a landlord can mount that rent and outgoings (or a proportion of them) should be paid. 

In this respect, some media reporting and even some initial legal advice in this area may be problematic, and may have built an unrealistic expectation amongst tenants that a 100% abatement is possible or even to be expected.  We have already developed a series of strategies for our landlord clients to employ when dealing with tenants and we expect many tenants will need to adjust their expectations as negotiations play out.

Where possible, we recommend reserving robust legal arguments until needed.  In the interim, landlords should be (and most are) reviewing their lease terms and engaging with their tenants to assess how they have been impacted by the Alert Level 4 lockdown, and whether a commercial deal can be struck.  Of course, that will not be easy if a tenant has already stated it will not pay rent and outgoings and, in such cases, dialogue will almost certainly be more fraught – and a more legal approach may be needed from the landlord to bring the tenant to the table before open discussions and negotiations can begin.

What if a lease does not provide for abatement?

Regardless of lease terms, many of our landlord clients are keen to find ways to accommodate their tenants and secure their rent roll in the long-term.

Even if a tenant has no right to an abatement under its lease, it may find that its landlord is willing to allow rent to abate, or be deferred.  In the medium to long term this is likely to be in everyone’s interest.  Already we are seeing deals being struck that allow a percentage (40/50%) of rent and outgoings to be paid for a finite period (3 months seems to be the norm).   Many landlords are prepared to agree the arrangement as a simple abatement, others are agreeing the unpaid rent will be deferred and amortised over the balance of the lease term.  Another option may be to extend the term of the lease, (if possible) increase security provided and/or vary future rent review mechanisms in return for the abatement.

We strongly recommend that tenants open discussions with their landlords, to investigate what options may be available – regardless of the strict legal position.

This article is for general information purposes only and not to be relied upon as legal advice.  For more information, please contact your usual Greenwood Roche partner or lawyer.


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COVID-19 – Implications for Commercial Leasing

COVID-19...

COVID-19 – Implications for Commercial Leasing

News & Insights

COVID-19 – Implications for Commercial Leasing

COVID-19 – Implications for Commercial Leasing

COVID-19 is having a significant and unprecedented effect on people and businesses in New Zealand.

At 11:59pm on Wednesday 25 March, New Zealand will be at Alert Level 4 of the Government’s COVID-19 Alert System. People must stay at home, travel is severely limited and all non-essential businesses must close. Further information is available at https://covid19.govt.nz/.


All aspects of business will be affected by the restrictions, including commercial leasing. Landlords and tenants will be considering their obligations under their leasing arrangements, what health and safety duties they have and how rental streams and contractual obligations may be affected.

Health and safety

An immediate focus for landlords and tenants will be on health and safety and their respective duties under the Health and Safety at Work Act 2015. Provided the parties work together and comply with government directives and requirements, there should be less risk of breaching the Act.

WorkSafe New Zealand has given a clear directive that, at this time, employers (including both landlords and tenants) must keep their workers (and all other persons) healthy and safe and comply with government directives and requirements. Once Alert Level 4 is in place all non-essential businesses and offices must be closed and workers are required to work from home. Building owners, property managers and tenants will want to communicate with each other, and to consider such things as ensuring that the building is secure, that they are not available to the public and who may enter the building during the lockdown.

Agreed rent abatement

The restrictions imposed by Alert Level 4 will affect business revenue streams very quickly. Therefore, businesses will look to reduce costs, and assess whether contractual obligations must continue. Rent represents a large cost to most business. Landlords and tenants may consider working together to share the burden of rent costs and improve cash flow for both parties in the short term. Parties may be more amenable to this approach to preserve a long-term leasing relationship.

Options that landlords and tenants may consider are:

  • rent holidays or incentives to assist tenants;

  • temporary rent suspensions for a period of time, with the suspended rent to be paid off through a payment plan once restrictions ease; or

  • reverting to a turnover-based rental with rent reduced, for example, by the same proportion as the tenant’s reduction in monthly turnover as against the previous year.

It will depend on the terms of the particular lease what option may work best. Care would need to taken to ensure that neither party waives any existing rights under the lease in agreeing any interim arrangements.

No access and force majeure provisions

It is possible that relief may be available to tenants under the terms of the lease. Some more modern leases may include “no access” provisions that allow a tenant to rent abatement or possibly a right to terminate the lease in certain circumstances, including where access to the premises is prevented or substantially affected. It is highly dependent on the wording of the particular clause whether the current circumstances would allow the clause to apply.

Similarly, a lease may include a force majeure clause. Although there is no standard force majeure clause, ordinarily this clause would provide that if a certain set of circumstances arise, that are outside the parties’ control (e.g. Acts of God, war, strikes) and, as a consequence, performance of the lease is impossible, impracticable or adversely affected, the lease may be able to be terminated.

However, the criteria to prove that a force majeure clause applies can be difficult to meet and the wording of the clause would need to be carefully considered, before determining that the effects of COVID-19 were sufficient to constitute a force majeure event in a particular lease.

Doctrine of frustration

If there are no lease provisions that may provide rental relief, a tenant could consider applying to the court under the common law doctrine of frustration. If successful, the lease would be terminated from the date of the frustrating event. Frustration occurs where the entire “common object” of the contract is frustrated. It is not enough if only one party’s advantage gained by the contract has been frustrated.

The courts have determined that a very high bar must be reached to prove frustration, and the circumstances of the particular lease and the effects of COVID-19 on that lease would need to be carefully weighed up. Court action may also be expensive and uncertain and in the current environment, and may even be practically impossible.  The case law also suggests that frustration relief will not be available where the contract itself deals with the circumstances, whether through a force majeure clause, a change in circumstances clause or otherwise.

Insurance

Both landlords and tenants may have business interruption insurance available to them. However, the policy would need to be reviewed in light of the current situation as often pandemics are excluded in these policies. Landlords may have loss of rent policies but again individual policies would need to be checked as they will often cover claims that arise from physical damage only.

Given the rapidly changing environment, both landlords and tenants will want to carefully review their particular lease arrangements to assess what options may be available to mitigate risks and reduce costs. If you need any advice in reviewing your lease options, we would be happy to assist you.

For more advice, please contact any Greenwood Roche partner or your usual Greenwood Roche lawyer.


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Report suggests NZS Conditions of Contract overdue for an overhaul

In September 2019 the Government passed legislation creating the New Zealand Infrastructure...

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Report suggests NZS Conditions of Contract overdue for an overhaul

In September 2019 the Government passed legislation creating the New Zealand Infrastructure Commission, Te Waihanga (Commission). The Commission seeks to lift infrastructure planning and delivery to a more strategic level and by doing so, improve New Zealand’s long-term economic performance and social wellbeing.

In August 2019 the Commission (then the Infrastructure Transactions Unit of Treasury) published a report by Urban Outcomes entitled ‘An examination of issues associated with the use of NZS Conditions of Contract’ (Report).  The Report found that the standard form contract governing many of these infrastructure projects is not operating as effectively or efficiently as intended.


The New Zealand Standard Conditions of Contract for Building and Civil Engineering Construction (NZS Conditions of Contract) is designed to provide comprehensive, balanced and readable contract forms that are widely understood by industry players and can be used for a variety of projects. NZS 3910:2013 is the most widely used construction contract in the New Zealand market.

While NZS 3910 has benefited from ‘limited scope reviews’ in 2003 and 2013, the contract has not undergone significant revision since 1987. The Report indicates that further significant revision may be required or, at the very least, that a change in the broader contracting culture surrounding the contract needs to take place.

The overarching finding of the Report is that there exists a ‘culture of mistrust’ between the public and private sectors. The Report identifies several issues with public sector procurement and contracting of major infrastructure projects that have led to this, namely:

  • that a skills gap is evident within most public sector agencies;

  • the perception that the public sector prioritises lowest price over value for money;

  • that special contract conditions are difficult to read and understand;

  • that time bars are being used as a means for the public sector to get “something for nothing”;

  • that there is no provision in the NZS Conditions of Contract for caps on contractors’ liability;

  • the impartiality of the Engineer to the Contract; and

  • that use of risk transfer is unsustainable and aggressive.

Skills Gap within the Public Sector
Given that the primary role of most public sector agencies is to deliver services to the public, infrastructure investment takes on a subsidiary role. As a result, there is a lack of experience and expertise in construction at an executive level within the public sector which inhibits the potential for informed and proactive approaches to the resolution of issues during construction projects. The Report suggests that ‘unworkable bureaucracy’ is then required to get a project complete.

The Report recommends that executive level governance is encouraged to call on independent industry experts to advise on project dynamics alongside legal advisors.  Such support would assist executive members’ understanding of key success and risk factors as well as advising on the feasibility of project timelines.

Lowest Price Procurement Practices
There is a view within industry that the Government follows a ‘lowest-price-wins’ culture. The fourth edition of the Government Procurement Rules (Rules), which came into force on 1 October 2019 (after the Report was released), aims to change this perception. The Rules require public sector agencies to undertake a holistic assessment of the public value of a tender during the procurement process. Whether the Rules result in a change to this culture will be known in time. Ultimately, poor procurement processes can lead to poor documentation, poor supply chain performance, and an increased risk of contractor failures.

In order to rebuild confidence in public sector processes, the Report proposes agencies strive for greater transparency, publish high quality tender documentation, and actively pursue and resolve examples of poor internal procurement processes.

Difficult to Understand Special Conditions
Special conditions are often added to the NZS Conditions of Contract to provide contractual flexibility for different operating environments. Accordingly, contracts can become long and highly technical. General, specific and special conditions, as well as schedules and often annexures together form contracts consisting of multiple documents that need to be pieced together.
The Report recommends following other international standards by allowing the tracking of changes into the general conditions of contract. This would allow parties to create one succinct but comprehensive document.

Unreasonableness of Time Bars
Time bars are a common special condition that provide the public sector with cost and time certainty in relation to variations. Time bars disentitle the contractor from claiming for the cost and time impact of variations that are instructed and completed on site, if the contractor has not submitted its claim within a set time.

The contractual timeframe is often limited to 10 working days. If a contractor fails to meet the timeframe or fails to provide the level of detail required, it may be ineligible for payment despite still having to complete the works required by the variation. This conduct heightens the culture of mistrust between parties and creates an expectation that the condition will be used as a disentitlement regime.

Among its proposals, the Report recommends time bars be adjusted to a minimum of one month or, alternatively, fixed for the final account and linked to the retention release.

Lack of Contractors’ Liability Caps
Clients and contractors have starkly contrasting views on the inclusion of liability caps and, if included, how they should operate.

An apprehension to bearing all liability is based on the industry’s perception that such liability may extend far beyond what could otherwise be earnt for the work. Clearly an unsustainable approach. Conversely, principals face a potential risk highlighted in the Report where, if a project is going badly, and the contractor is approaching a liability cap, it may decide to walk away rather than completing the project.

There is opportunity to contribute to a sustainable construction sector by providing guidance to public sector agencies outlining when a liability cap is appropriate and what that limitation might look like.

Impartiality of the Engineer to the Contract
The Engineer to the Contract (Engineer) is expected to act, simultaneously, as an impartial intermediary between parties, an independent certifier and expert advisor and representative of the principal, giving directions to the contractor on the principal’s behalf. The Engineer undertakes all of these roles while generally being on the principal’s payroll. The potential for conflict issues to arise is clear.

The role of the Engineer is critical for both parties under a construction contract, which is why it is vital that the actual independence (as well as the perceived independence) of the role remains. The Report advocates for the establishment of a panel of individual experts who can be procured by the public sector for a specific project. These panel members would be agreed on upfront by public sector agencies and industry.

Unsustainable Risk Transfer
The transfer of specific risk should only occur if the recipient is best placed to manage the risk and its cost. In some cases, the Report found risks that were entirely out of the contractor’s control were nonetheless transferred despite the contractor having no viable means to mitigate that risk. In other cases, where risk has not been transferred, contractors have been unwilling to assist in managing risks because they were not directly affected by them.

The Report suggests that guidance be issued in relation to risk transfer, detailing the purpose of risk, as well as the potential impacts of misplaced risk. Business cases should include a transparent risk transfer table together with cost and time implications so that informed decisions can be made as to whether a risk is retained, shared, or transferred.

New Zealand’s public sector spends up to $10 billion annually on the procurement of infrastructure.

The Report concludes that addressing the highlighted issues will enable the NZS Conditions of Contract to function as intended and provide a contractual foundation for infrastructure where both the public and private sectors feel that their interests are protected. This in turn will increase the performance of the sectors in procuring and delivering infrastructure projects.

Our Construction team prepares a number of NZS 3910 contracts for infrastructure projects throughout New Zealand and we are dedicated to developing and maintaining strong partnerships between the public and private sectors.  We contributed to the Report (through a client) and participated in a subsequent workshop led by the Infrastructure Transactions Unit to discuss its findings.


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New standard sale and purchase agreement

27 November 2019 marked the release of the latest version of the commonly-used agreement...

New standard sale and purchase agreement

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New standard sale and purchase agreement

New standard sale and purchase agreement

27 November 2019 marked the release of the latest version of the commonly-used agreement for sale and purchase of real estate.


While the new version released by Auckland District Law Society Incorporated and Real Estate Institute of New Zealand Incorporated is intended to be easier to read and incorporates some useful changes, the most significant changes relate to the vendor’s warranties, compensation claims by purchasers, Good and Services Tax and toxicology reports.

The agreement introduces a new standard warranty given by vendors that, at the date of the agreement, the vendor has no knowledge of any fact that might result in legal proceedings (including referral to mediation or arbitration) other being brought in relation to the property. This is a broad warranty, and vendors will need to consider whether anything exists that might give rise to proceedings before they enter the agreement.

The procedures for a purchaser to claim compensation now include a two step process in situations where the vendor disputes the purchaser’s claim to compensation. Previously, a vendor could pressure a purchaser into settling for the full amount as the consequences for the purchaser for failing to settle would be significant if the purchaser was later found to be wrong. The new agreement allows for the dispute about the purchaser’s right to claim compensation to be dealt with in advance of determining the interim amount to be withheld on settlement, but does not deal with the substantive claim.
The GST provisions have been updated to protect the vendor where the agreement provides for a GST-inclusive price with the expectation of a zero-rated sale, and the purchaser changes its status before settlement so that the vendor needs to account for GST from the purchase price. This is intended to ensure that the vendor does not lose out due to the purchaser’s actions.

A new optional condition has been inserted which allows for the agreement to be entered into conditional on the purchaser obtaining a satisfactory toxicology report. The purpose of the report is to test contamination from the preparation, manufacturing or use of drugs with specific reference to methamphetamine. The report must be completed objectively and in good faith, and must be in writing.

The finance clause has also been amended so that the purchaser is able to select what financial institution the purchaser wants to seek funding from. If the purchaser seeks to avoid the agreement for non-satisfaction of this condition, the purchaser must give the vendor reasonable evidence confirming that finance is not available.

There remains no standard solicitor’s approval as to title condition, valuation condition or due diligence condition. Purchasers (and vendors) should therefore consider adding other conditions before signing an agreement.

The new agreement for sale and purchase coincides with the release of the New Zealand Law Society’s Property Transaction Guidelines, which were developed with the assistance of Julian Smith, from Greenwood Roche.


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The Emissions Trading Scheme – time for an update

New Zealand takes its place on the global stage with its efforts to combat the effects...

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The Emissions Trading Scheme – time for an update

New Zealand takes its place on the global stage with its efforts to combat the effects of climate change.  The Emissions Trading Scheme is at the centre of these efforts.  Improvements to the Emissions Trading Scheme were announced on 31 July 2019. 


Climate change is arguably one of the most pressing threats to the planet.  According to the United Nations, climate change “is the defining issue of our time and we are at a defining moment”. 
 
The Kyoto Protocol requires its members to monitor their actual greenhouse gas emissions and precise records of trades have to be kept.  It has set the framework for numerous policy, legislative and environmental initiatives.  New Zealand has the unique opportunity of playing its part in reducing greenhouse gas emissions through forestry.  Forestry exports are worth around $5 billion a year and forestry directly employs approximately 20,000 people.  It is a crucial part of our climate change response.
 
With that in mind, it is imperative that New Zealand implement a sufficient, robust and effective Emissions Trading Scheme (ETS).  On 31 July 2019, improvements to the ETS regulations were announced to reach that goal.  An Amendment Bill to the Climate Change Response Act 2002 will be introduced to Parliament later this year.  Four changes in this Amendment Bill are worth noting:
 

  1. the introduction of “averaging accounting” for foresters;
  2. the reduction of free allocation to major industrial emitters;
  3. the cancellation and replacement of units from the first commitment period of the Kyoto Protocol; and
  4. the introduction of a “stand down period”.
 
Averaging Accounting
 
The original carbon stock accounting provides that foresters must surrender their ETS units at deforestation (even if forestry is planted elsewhere).  Now, averaging accounting provides that a forest owner will not surrender its emissions units provided the deforested land is replanted (regardless of its location).  Given new forestry can be planted in a different location, farm land can be converted to other uses.  Foresters are given more flexibility.  Under the new regime, the ETS units accumulate as the forest grows up to a determined average level of long term carbon storage.
 
Previous accounting measures required foresters to repay their emissions units in the event of a natural disaster.  The latest changes to the ETS remove the obligation to repay provided replanting is done within 4 years. 
 
Averaging accounting will be optional for forests registered under the ETS from 2019 and will be mandatory for forests registered from 2021 onwards.  It will not apply to forests registered under the ETS prior to 2019.
 
Industrial Allocation
 
There are currently 26 industrial activities within New Zealand that are eligible to receive free industrial allocation.  This allocation reduces their expenses under the ETS which provides an incentive for businesses not to go offshore.  These activities are estimated to be responsible for up to 14 percent of New Zealand’s greenhouse gas emissions.  From 2021, changes to the ETS will phase down the industrial allocation.  During the time period of 2021-2030, industrial allocation will be reduced at 1 percent per year.  The reduction will then increase to 2 percent from 2030-2041 and increase again to 3 percent from 2041-2050.
 
Industrial businesses will be encouraged to invest in clean energy alternatives that reduce emissions.  The Government has said it will review rates from 2031.
 
Cancellation and Replacement of Units  
 
There are currently privately held units issued from the Kyoto Protocol’s first commitment period (2008-2012).  The ETS now require these units to be cancelled and replaced with an equivalent number of New Zealand units.  Currently, a host country and the country buying the units could both claim a credit for the emission reductions.  Cancelling these units avoids double-counting.  The units will be cancelled on 30 November 2020.
 
Stand Down Period
 
Previously, forests planted after 1989 outside of the ETS (and some inside the ETS) could deforest and not be liable under the ETS.  If replanted, these forests would earn more units under the ETS and would therefore achieve a windfall.  This should be avoided since there is technically no increased benefit as the number of trees planted has not changed.
 
Changes to the ETS now create a “stand down period”.  If the described land is deforested, the land cannot be replanted (and joined to the ETS) for a period of time. 
 
Commentary
 
The above recent changes to the ETS are aimed at more effectively capturing the purpose of the ETS.  The introduction of the stand down period and removal of industrial allocations create a more universally comprehensive scheme.  However, major industrial emitters will continue to point to the wider economic and fiscal implications of their becoming fully subject to the scheme (and lack of any net environmental benefit in a global context).  The issues here are indeed vexed.
 
The new averaging accounting regime favours foresters.  It improves the ETS’s flexibility and creates a more appealing system.  Forestry land can be replanted in different locations and foresters are also more adequately protected from natural disasters.  Encouragement to plant forestry must be met with a realistic scheme that recognises farming and forestry are not static or predictable.  Rotating land use enables farmers and foresters to productively work their land without ETS liabilities arising.  There are currently concerns over productive farm land being turned into forestry permanently.  It is arguable that workable farm land could be lost, reducing New Zealand’s agricultural industry.  The ability to convert forestry land back to farm or cropping land (with forestry planted elsewhere) helps address these concerns. 
 
Having an effective ETS helps New Zealand to more accurately monitor and work towards reducing its greenhouse gas emissions. These new changes take us one step further to reaching that goal.


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Chief Ombudsman releases final opinion on East Lake Trust/Regenerate Christchurch case

Greenwood Roche lawyers, Lauren Semple and Rachel Murdoch, have been working with Regenerate...

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Chief Ombudsman releases final opinion on East Lake Trust/Regenerate Christchurch case

Greenwood Roche lawyers, Lauren Semple and Rachel Murdoch, have been working with Regenerate Christchurch on the development of the draft Otakaro Avon River Corridor Regeneration Plan which is the subject of this review case.


In response to a complaint, the Chief Ombudsman’s opinion confirms that Regenerate Christchurch acted lawfully and in an administratively reasonable manner in the development of the draft plan.  The draft plan is currently with the Minister for Greater Christchurch Regeneration for her approval or decline. For more information and to review the case note please click here.


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Productivity Commission - LG funding and financing

On the 4th of July the New Zealand Productivity Commission released a draft report on...

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Productivity Commission - LG funding and financing

On the 4th of July the New Zealand Productivity Commission released a draft report on Local Government Funding and Financing.
 
This report is the result of the Government’s request for the Productivity Commission to undertake an inquiry into local government funding and financing; and where shortcomings in the current system are identified, to examine options and approaches for improving the system.


While there were a number of suggestions made, the draft report found the current framework is broadly sound. The Commission Chair stated “The current framework measures up well against the principles of a good funding and financing system for local government. It is clearly separated from the central government’s tax base which is an important feature. It is relatively simple and economically efficient. It also provides a high degree of flexibility for councils to shape how they raise their revenue.”
 
Existing tools
The report notes that councils can make better use of the tools they already have access to, and there is room to improve organisation performance, transparency and decision making that will help to relieve cost pressures. These existing tools include rates, fees are user charges, development contributions, central government funding and debt.
 
The Commission favours the “benefit principle” as the primary basis for deciding who should pay for local government services. Those who benefit from a service should pay for its costs. Additionally, where local services benefit national interests, central government should contribute. User charges or targeted rates should also be utilised.
 
The Commission found that there is no clear evidence that rates have become less affordable over time, despite this being one of the key reasons the inquiry was undertaken. Overall, rates have continued to broadly align with population and income growth over the past 3 decades, but have not become relatively more burdensome.
 
Cost pressures and new tools
The report noted some new tools are needed to help councils deal with some specific cost pressures. The highest priority pressures have been identified as:
 

  • Supply of infrastructure to support rapid urban growth: the failure of high growth councils to supply enough infrastructure to meet demand is a serious social and economic problem.
  • New tools: special purpose vehicles; central government funding; tax on vacant land; volumetric charging of wastewater; road congestion pricing; and value capture for property owners who enjoy “windfall gains”.
 
  • Climate change: rising sea levels and more intensive rain events threaten infrastructure, particularly roads and waste / storm water infrastructure. These risks are large and unevenly distributed across the country.
  • New Tools: Extended NZTA model; Local Government Resilience Fund and Agency; and more national leadership in developing and providing high-quality and consistent data, information, guidance and legal frameworks.
 
  • Tourism: the increasing number in tourists has led to pressure on several types of services and infrastructure in districts that are popular tourist destinations. Tourists are using mixed-use facilities without making a direct contribution.
  • New Tools: A tourist accommodation levy; and provide local councils with a share in the new international tourist border levy.
 
  • New standards and requirements from central government: e.g. meeting health and environmental standards in the three waters sector is a major challenge for many councils, and the Commission makes the case for significant reform of the sector.
  • New tools: development of a “Partners in Regulation” protocol to improve the state of relations between central and local government.
Submissions on the draft report are open until 29 August 2019. The final report is ultimately a recommendation to the Government and will not be bound by the results of the report. It is set to be released on 30 November 2019.


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Infrastructure Commission Bill Released

As part of its broader focus on the construction and infrastructure sectors, the Government...

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Infrastructure Commission Bill Released

As part of its broader focus on the construction and infrastructure sectors, the Government is proposing a bill which would establish a Crown entity tasked with providing strategic independent advice and oversight on the planning, co-ordination and delivery of public sector-led infrastructure projects in New Zealand. 


Summary
The establishment of Te Waihanga – New Zealand Infrastructure Commission as a Crown entity is one of the more significant actions taken by the Government towards addressing the major infrastructure deficit in New Zealand, and the existing challenges with the planning, co-ordinating and delivery of infrastructure projects which have contributed to New Zealand’s current position.  Taking lead from similar initiatives in Australia, the UK and elsewhere, the Commission will provide strategic oversight and leadership over the way in which infrastructure projects are planned, co-ordinated and procured.  Critically, its functions are advisory only.  Any decision-making regarding infrastructure projects (including investment in those projects, or the timing for or manner in which they are procured and delivered) will remain with the relevant Ministers/departments.  

Specifics
Under the bill, Te Waihanga would be established as an autonomous Crown entity, governed by a board of up to 7 members.  The entity will largely take shape from the existing Infrastructure Transactions Unit currently within Treasury which will be incorporated into Te Waihanga once it is established (anticipated for October 2019).

The overarching function of the Commission is to co-ordinate, develop, and promote an approach to infrastructure and resulting services that improve the well-being of New Zealanders.  The bill authorises the Commission to carry out that function through two main ways:

1.  Strategy and planning through:

b. Providing advice on infrastructure including the current state of infrastructure, current and future infrastructure needs, infrastructure priorities, and matters which may prevent the effective delivery of infrastructure.

a. Promoting a strategic and coordinated approach to the delivery of infrastructure projects;

c. Providing support services to those projects, including advice, services or staff to assist in the delivery of a project.

While not specifically included as a provision in the bill, the explanatory note identifies that Te Waihanga would be empowered to, and will be expected to, promote best practice infrastructure delivery as part of its supporting function.  To that end, it is expected that the Commission will:

e.  Publish a pipeline identifying existing and upcoming infrastructure projects (the first of these can be accessed on the Treasury website);

f.  Produce best practice guidance on infrastructure procurement and delivery.  This function will be part of its role as the “centre of expertise to assist infrastructure projects to be delivered efficiently and effectively”.  To that end, where requested by the relevant department/Minister, the Commission will also provide advice on business cases for proposed projects. 

In support of its functions (and in addition to its general powers as a Crown entity), the bill both grants powers to, and imposes obligations on, the Commission, including:

  • The requirement to publish a strategy report setting out the Commission’s views on the ability for existing infrastructure to meet community expectations over the next 30 years, and the priorities for infrastructure over that same time period.  The report (which will be issued at least once every five years) may also include any other matter the Commission considers relevant.  The Minister for Infrastructure has the opportunity to comment on the report before it is finalised, but once finalised, the Government will then be required to provide a formal response to it which must be made public.
  • The Minister may also direct the Commission to provide a report on any matter relating to infrastructure.
  • Where necessary and desirable to enable the performance of its functions, the Commission is also empowered to require the provision of specific information from specified government departments, agencies, statutory entities and the New Zealand Defence Force. 

Comment
This proposal has generally received strong support and input from industry and experts within both the public and private sector, and represents a critical step towards a more informed, strategic and coherent approach to infrastructure planning, procurement and delivery.  Perhaps the biggest potential shortcoming is the general lack of any strong levers which would at least encourage action/compliance by other government departments with the advice of the Commission.  For example, while the Government would be required to issue a response to the Commission’s strategy reports, government departments are not obliged to consider the findings of the reports in reaching any decisions relating to procurement or planning of capital projects, nor consult with the Commission.  Consequently, to successfully effect change at the decision making level, the Commission will need to build a narrative around the positive impacts of sound planning and procurement, and the role that it can play in supporting other departments in achieving those outcomes.  Even if it is able to do so, there is still the risk that the Commission could be sidelined.

Among the options to mitigate this risk, there is the opportunity to expand the Commission’s mandate to include monitoring and reporting on the Government’s progress in addressing New Zealand’s infrastructure challenges.  While under the current proposal it would be required to provide “state of the nation” assessments, there is no explicit directive to undertake on-going monitoring of how the Government is responding to the findings of the Commission’s assessments, including how it is addressing identified constraints on the effective delivery of infrastructure.  Expanding the Commission’s mandate to include monitoring and reporting on the Government’s response to the identified challenges and opportunities (which would also, as a first step, require the development of some form of metric) would strengthen the Commission’s ability to keep the Government accountable for effecting improvements in the planning, procurement and delivery of infrastructure.

For further information on the Commission or if you are interested in receiving further updates on this matter, please do not hesitate to contact us.


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People

Julian Smith – Partner

As a leading commercial property lawyer, Julian specialises in infrastructure, acquisitions...

Julian Smith

Michael Goodger – Principal

Michael has 20 years' experience specialising in commercial property and real estate....

Michael Goodger

Jane McDiarmid – Principal

Jane is a senior lawyer with over 20 years’ experience in commercial transactions and...

Jane McDiarmid

Rachel Robertson – Principal

Rachel has over 25 years’ experience acting for companies, government, State-owned enterprises...

Rachel Robertson

Nikita Day – Lawyer

Nikita joined Greenwood Roche in 2019 as a graduate from University of Canterbury. She assists...

Nikita Day

Ruby Maxwell – Lawyer

Ruby joined Greenwood Roche in 2019 as a graduate from the University of Otago. Ruby assists...

Ruby Maxwell

Emily Mulvey – Lawyer

Emily joined Greenwood Roche in February 2018 as a graduate from the University of Otago....

Emily Mulvey

Caleb O'Fee – Lawyer

Caleb joined Greenwood Roche as a Summer Clerk in November 2016 before returning at the end...

Caleb O'Fee

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