• icon-head.png
  • icon-phone.png
  • icon-pin.png
  • icon-head.png
  • icon-phone.png
  • icon-pin.png
 

News & Insights

 

Search

News & Insights

Potentially significant %NBS downgrades loom for some Wellington buildings

A seismic event in NZ’s property market occurred in November last year. More like a slow slip quake than a sudden jolt, the November 2018 update to the guidelines for seismic assessment of existing buildings went largely unnoticed by many in the property industry. The effects, however, are now beginning to be felt, with the recent closure of Wellington Central Library and the assessment of its floors at just 20%NBS being one of the first publicly visible signs...

News & Insights

Potentially significant %NBS downgrades loom for some Wellington buildings

A seismic event in NZ’s property market occurred in November last year. More like a slow slip quake than a sudden jolt, the November 2018 update to the guidelines for seismic assessment of existing buildings went largely unnoticed by many in the property industry. The effects, however, are now beginning to be felt, with the recent closure of Wellington Central Library and the assessment of its floors at just 20%NBS being one of the first publicly visible signs.


To appreciate what has happened and where this will lead, it’s helpful first to understand the legal and engineering framework within which seismic assessments of buildings are made. The starting point here is the guidelines for The Seismic Assessment of Existing Buildings (Guidelines), which detail the technical basis on which engineers carry out seismic assessments of existing buildings. In basic terms, the Guidelines govern how seismic engineers review a building to arrive at a robust assessment of its “%NBS” – the all important percentage of the “new building standard” that an existing building achieves.

This process and the outcomes are hugely important because a %NBS rating (almost universally misunderstood by property advisors and lawyers alike) has become a proxy for seismic safety. As a result, %NBS underpins acquisition, development and leasing decisions and is a key consideration for many Crown agencies and corporates in their property strategies and health and safety assessments. The Guidelines also form part of the EPB (earthquake prone building) methodology produced by the Ministry of Business, Innovation and Employment, by which territorial authorities are required to identify earthquake-prone buildings.
 
When version 1 of the Guidelines was first released in July 2017 (superseding guidance from 2006), it was seen as a significant step forward. The Guidelines were an extensive revision by industry experts of earlier thinking and incorporated a wealth of research, knowledge and experience obtained from the significant New Zealand earthquakes between 2010 and 2016 – a period which included the Christchurch, Seddon and Kaikoura earthquakes. As such, and with one critical exception, the Guidelines represented the latest understandings on the seismic behaviour of existing buildings.
 
That one critical exception was Section C5 of the Guidelines, a section governing the detailed seismic assessments of concrete buildings. With the timing of the general release of the Guidelines in mid-2017, it simply wasn’t possible to include new guidance on a range of matters, including assessing precast concrete floor systems to take account of new knowledge from the Kaikoura earthquake, and to respond to recommendations made in the Statistics House investigation. However, this was remedied in November 2018 with the release of a new Section C5 (version 1A), and the slow slip quake in the market began.
 
The revisions to Section C5 are numerous, with changes addressing: material strength, “single crack” scenarios in concrete members, deformation limits due to buckling of walls and columns, limiting conditions leading to the loss of gravity support in columns, slab-column connections and walls, and strength degradation for lightly reinforced joints. None of that appears particularly reassuring to the untrained eye but, more significantly, there is also a complete revision of the guidance detailing the assessment of precast concrete floors – that is, precast concrete hollow-core, double-tee, rib and infill, and flat slab floor units, all of which have been relatively common methods of floor construction since the 1980s.
 
In relation to precast floors, the new Appendix C5E records in unemotive engineering prose that, in an earthquake, it is possible for “unseating” of precast floors to occur (that is, precast floors may fall off their supporting ledges within the building frame) and that precast floors can be particularly susceptible to damage that has the effect of “compromising gravity load support” (that is, precast floors may collapse). Appendix C5E goes on to state that “For buildings with older support detailing, the limiting drift at failure of the precast floors is likely to be less than the limiting drift for the frame and may govern the earthquake rating for the building as a whole.” Translated, this means that precast floors may fail before the building frame itself and, if that is the case for your building, then its %NBS will diminish to that earlier point of failure.
 
While the devil is very much in the engineering detail, the practical effect of the changes to Section C5 of the Guidelines is that the %NBS of many relatively new buildings with precast floors is likely to fall. There are many such buildings in New Zealand but, of the larger centres, Wellington, Napier, Hastings and Palmerston North are likely to be disproportionately affected due to higher “Z-values”, being the seismic risk factors applicable to those regions.
 
How much lower the %NBS numbers will go is, of course, a key issue, as is whether buildings remain safe. These assessments in turn depend on a range of factors relating to a particular building, including the type of floor and the flexibility of the building frame. You will need an engineer to tell you but, for some buildings, the %NBS drop may be significant. While it hasn’t been highlighted in reporting to date, Aurecon New Zealand Limited’s assessment of Wellington Central Library, is “that the hollowcore precast floor system… achieves a score of 20%NBS” – this for a building that opened in 1991.
 
Of course, not all buildings will be affected like Wellington Central Library and, for some buildings, a small %NBS decrease may not be material.  However, for owners, tenants, funders and insurers of a 70%NBS structure, a 15-20% drop may well have major ramifications. Where a change in %NBS crosses a critical threshold for a party, their options will, as ever, be constrained by their existing contracts and the availability of alternatives.
 
Weaknesses in leasing documents will also be exposed. The standard ADLS deed of lease, for example, does not address seismic standards and a number of leases with negotiated seismic covenants require there to be an earthquake of a minimum magnitude before the tenant can even access rights related to the %NBS of the building. Neither position is advisable. However, even where a tenant has a contractual escape route, its options will be practically limited by the availability of alternative premises and business continuity requirements.
 
A further issue is how or whether affected parties will even know that the %NBS of the building has fallen. In the absence of an earthquake, few tenants have cause to consider the accuracy of historical seismic reports. Correspondingly, there are generally no incentives or legal requirement for landlords to seek assessments that may indicate things have changed for the worse, or to disclose these if they are obtained.
 
Even less likely is that owners, outside local or central government, will close their buildings and, other than in the most extreme cases, there is no legal requirement for them to do so. In the case of Wellington Central Library, where engineers identified that “the potential loss of seating of the hollowcore units presents a significant hazard and potential risk to building occupants following a significant earthquake event”, Mayor Justin Lester observed that "We're not legally obliged to close this building, we are morally obliged”. Not all building owners will see it the same way.
 
Those concerned about their buildings should seek information from engineers and owners and take engineering and, potentially, legal advice. Next steps can then be informed by reference to assessed risk, existing contractual positions and organisational health and safety policies and obligations.
 
Doran Wyatt is a Partner with expertise in seismic matters, leasing and developments. He acts for a range of Crown agencies and institutional investors and is based in Greenwood Roche’s Wellington office.  The content in this article is not legal advice.  Our team would be happy to assist with any specific issues.


Download as a PDF
Close window
x

Property Council Residential Development Summit

Lauren Semple, who leads our Resource Management Team presented at the Property Council Residential Development Summit in February 2019. ..

Property Council Residential Development Summit

News & Insights

Property Council Residential Development Summit

Property Council Residential Development Summit

Lauren Semple, who leads our Resource Management Team presented at the Property Council Residential Development Summit in February 2019. 


Some philosophical issues to sort out with an Urban Development Authority model based on our experiences in Christchurch.  If coming to the end of the use of such powers in Christchurch is seen as a “return to local leadership” does it follow that the use of such powers in the first place is an affront to local democracy?  And how does that fit with the intention to deliver national UDA legislation.  Good conversation starter.  Want to know more, please do not hesitate to contact Lauren Semple or our Resource Management team.


Download as a PDF
Close window
x

Subdivision Intensive Paper

Lauren Semple presented a paper as part of the NZCLE Workshop on Subdivisions.  This paper considers the wider context of subdivision and land development and reflects on some of the tools, requirements and alternative processes which can influence the way projects take shape.  ..

Subdivision Intensive Paper

News & Insights

Subdivision Intensive Paper

Subdivision Intensive Paper

Lauren Semple presented a paper as part of the NZCLE Workshop on Subdivisions.  This paper considers the wider context of subdivision and land development and reflects on some of the tools, requirements and alternative processes which can influence the way projects take shape.  


It first looks at a number of the alternative legislative schemes set up in recent years to fast track development (including subdivision), and considers some of the lessons from these examples which may usefully inform future legislation including the much touted but not yet here urban development authority approach.  It touches on the role of, and tools available to, local authorities under the Local Government Act in relation to subdivisions, including the use of development contributions and development agreements to service growth and asks whether our preoccupation with new tools might prevent us from effectively utilising the tools we already have.   
Download the paper here - https://app.box.com/s/58174muot1x5y7b53t8imgxd4d5l5frd


Download as a PDF
Close window
x

Draft Otakaro Avon River Corridor Regeneration Plan released for public consultation

For the past two years, we have been advising Regenerate Christchurch on the development of the Otakaro Avon River Corridor Regeneration Plan.  ..

Draft Otakaro Avon River Corridor Regeneration Plan released for public consultation

News & Insights

Draft Otakaro Avon River Corridor Regeneration Plan released for public consultation

Draft Otakaro Avon River Corridor Regeneration Plan released for public consultation

For the past two years, we have been advising Regenerate Christchurch on the development of the Otakaro Avon River Corridor Regeneration Plan. 


The Draft Plan was released for consultation on 14 November 2018 with submissions due by 5pm on 19 December 2018.  You can find a copy of the draft plan here - http://engage.regeneratechristchurch.nz/accessible-draft-oarc-regeneration-plan-homepage
 


Download as a PDF
Close window
x

Greenwood Roche – Wellington Supreme Award 2018

We are pleased to continue to support the Property Council New Zealand Wellington Property People Awards which recognise and celebrate excellence in property in Wellington...

Greenwood Roche – Wellington Supreme Award 2018

News & Insights

Greenwood Roche – Wellington Supreme Award 2018

Greenwood Roche – Wellington Supreme Award 2018

We are pleased to continue to support the Property Council New Zealand Wellington Property People Awards which recognise and celebrate excellence in property in Wellington.


Wellington Partner, Doran Wyatt had the honour of presenting the Greenwood Roche Supreme Award as part of the event on 11 October 2018.

Congratulations to McKee Fehl Constructors Ltd, this year’s winner of the Greenwood Roche Supreme Award, for the Press Hall 80 Willis Street / 22 Boulcott Street project.
 
What stood out for the judges was the ability of McKee Fehl to repurpose and modernise the Press Hall site.  The end result is an iconic development that adds vibrancy to Wellington but also respects the heritage of the original building.
 
The testimonials for this project summed it up:

  • “The concept of unlocking Press Hall, which was essentially buried in between Boulcott Street and Willis Street, was a clever idea.”
  • “The newly formed urban laneway leading to the food hall is activated by vibrant and diverse kiosks and a bar above, the veranda can now be occupied by people adding to the urban fabric of the street.”
  • “Never before have such old, run down, dark and dingy buildings been so substantially structurally modified, seismically upgraded and refurbished to create such an open, vibrant and modern workplace.”
In the judges’ words, “This feels like an iconic development with wide benefit for Wellington”.
 
Congratulations to Maurice Clark and the McKee Fehl team.


Download as a PDF
Close window
x

New National Housing and Urban Development Authority

The Government has confirmed the introduction of a national Housing and Urban Development Authority (HUDA) equipped with the tools to by-pass standard legislative processes and streamline urban development projects.  The announcement follows numerous recommendations in various reports over the past decade and the release of the Urban Development Authorities: Discussion Document last year...

News & Insights

New National Housing and Urban Development Authority

The Government has confirmed the introduction of a national Housing and Urban Development Authority (HUDA) equipped with the tools to by-pass standard legislative processes and streamline urban development projects.  The announcement follows numerous recommendations in various reports over the past decade and the release of the Urban Development Authorities: Discussion Document last year.


Eligible urban development projects will include the provision of new public, affordable and Kiwibuild housing, as well as transport links, commercial and industrial developments, infrastructure and supporting community facilities (schools, pools, open spaces and libraries). The HUDA will also absorb the function of Housing New Zealand as the landlord for public housing in New Zealand. 
 
Read more here: https://app.box.com/s/2kjey5enswm7x08itfis3knzokz67t8o


Download as a PDF
Close window
x

Key changes introduced by the Land Transfer Act 2017

The Land Transfer Act 2017 (Act) came into force on Monday, 12 November 2018. It repealed the Land Transfer Act 1952 (Old Act), and is intended to modernise, simplify and consolidate the Old Act and its amendments. The Act also made amendments to the Property Law Act 2007 (PLA), including the introduction of covenants in gross, with effect from 12 November 2018. ..

Key changes introduced by the Land Transfer Act 2017

News & Insights

Key changes introduced by the Land Transfer Act 2017

Key changes introduced by the Land Transfer Act 2017

The Land Transfer Act 2017 (Act) came into force on Monday, 12 November 2018. It repealed the Land Transfer Act 1952 (Old Act), and is intended to modernise, simplify and consolidate the Old Act and its amendments.

The Act also made amendments to the Property Law Act 2007 (PLA), including the introduction of covenants in gross, with effect from 12 November 2018.


In the main, the Act is not intended to change our land transfer laws substantially. However, some controversy exists regarding the right of an owner to reclaim title under the manifest injustice provisions, arguably eroding the principle of indefeasibility of title. Also, not all changes promoted during consultation have been adopted, such as placing more onus on mortgagees to verify the identify of their clients, separately defining encumbrances from mortgages, and permitting senior legal executives to certify and sign instruments in Landonline.
 
Some key changes are set out below.
 
New terminology
The Act includes new terminology aimed at modernising the language used. For example, a “certificate of title” and the clumsy “computer freehold/leasehold/interest register” has become the crisper “record of title”, and “registered proprietor” has become “registered owner”. There is also a concept of “replacement lease”, which is a renewed lease or a new lease in substitution for a prior lease between the same parties and relating to the same land.
 
Withholding information for a person’s safety
The Registrar-General of Land is able to refuse to provide a copy of an instrument or a record of title that identifies a person, or to include those details on the register in the first place, if the Register is satisfied that the information discloses or is likely to disclose the person’s location and prejudice their safety.
 
Caveats
There is now an express right for an owner of an estate or interest in land to lodge a caveat against their own title where there is a real risk of fraud.
 
Guaranteed title searches
Guaranteed searches back up the security of the land transfer system, by providing a right to compensation if a purchaser of an interest in a land transaction suffers loss due to the registration of a competing interest. Under the Old Act, the purchaser had to obtain a “guaranteed search” within 14 days before settling the transaction, and had to lodge the transaction documents within 2 months after settlement.
 
The Act updates these periods to reflect the electronic nature of land transactions by:

  • requiring that a guaranteed search of the title be obtained within 5 working days before (and including) the settlement date; and
  • reducing the period after settlement during which the transaction documents must be lodged at Land Information New Zealand (LINZ) to 20 working days.  
As with the Old Act, no compensation will be payable if the title search disclosed the competing interest.
 
Compensation
Compensation is payable by the Crown when loss occurs in certain circumstances (including, but not exclusively, under the “guaranteed search” situation). Under the Old Act, the calculation for compensation is based on the land value at the time the loss occurred. The Act shifts the date on which compensation is to be assessed to when the claimant “gained (or ought reasonably to have gained) knowledge of the loss”.
 
The Act confirms that the value of the lost estate or interest in land is the “market value”.
 
The High Court may adjust compensation where the amount determined by the prescribed calculation is inadequate or excessive, and may determine at which date the market value should be assessed which may include a revised assessment as at the day of the court judgment.
 
Cancellation of land transactions in cases of “manifest injustice”
The High Court will have limited discretion to order the alteration of titles to avoid “manifest injustice”, but only where compensation or other damages would not properly address the injustice. The High Court may cancel registration of a land transaction and restore title to a person who has been deprived of an estate or interest, or suffered loss, due to that registration. The Court must take into account how the land was acquired, the length of time the parties have owned or occupied the land, the nature of any improvements made, the special characteristics of the land and its significance, and any other relevant circumstances. However, the Court cannot make an order if the estate or interest has subsequently been transferred to a third person acting in good faith.
 
Fraud
Fraud is one of the main exceptions to the indefeasibility of an owner’s title to land. “Fraud”, as an exception to indefeasibility, is now defined as forgery or other dishonest conduct of an owner or agent of an owner in acquiring an estate or interest in land. It is worth noting that, for the purposes of a Court order cancelling a land transaction in the case of “manifest injustice”, the existence of forgery or other dishonest conduct will not itself constitute the required level of injustice.
 
Introduction of covenants in gross and what it means for encumbrances
Until commencement of the Act, it was not possible to register an instrument that contained covenants or promises given by a landowner “in gross” – i.e. in favour of another person, rather than benefiting another parcel of land. Traditionally, these covenants have been included in encumbrances, which are a form of mortgage used for securing a long term obligation to pay a rental (known as a “rent charge”). To reduce the widespread use of encumbrances, the PLA has been amended to allow covenants in gross to be noted on records of title. This has been long awaited and should provide a registration option which is more palatable especially to banks. It also allows affected owners to seek modification or cancellation of existing encumbrances and replace them with covenants in gross.
 
While encumbrances are commonly used as a mechanism to register covenants, they are also properly (but uncommonly) used to register rent charges, and encumbrances are still referred to in the parts of the Act governing mortgages. Encumbrances therefore remain a viable instrument. There are some benefits in using encumbrances over covenants, including exclusion of the covenant modification provisions in the PLA, but, where the real purpose is to require a landowner to do or refrain from doing something for the benefit of another person, a covenant in gross will generally be the appropriate instrument.
 
Registrar’s power to correct titles
The Act clarifies the circumstances in which the Registrar is able to correct titles. The Registrar’s power of correction is now limited to correcting an error made by the Registrar, correcting an error made by a person preparing a document or information for registration, recording a boundary change due to accretion or erosion and giving effect to a court order.
 
Overriding statutes
The Act repeals the Statutory Land Charges Registration Act 1928, with the Act dealing with the registration, priorities and release of relevant charges.
 
Regulations
The Land Transfer Regulations 2002 have also been revoked, with the Land Transfer Regulations 2018 (Regulations) replacing them.
 
One of the key changes made in the Regulations is to update the terms implied into certain classes of easements. These changes include:
  • altering the description of the affected land from “servient tenement” to “burdened land” and from “dominant tenement” to “benefited land”;
  • referring to the part of the burdened land subject to the easement as the “easement area”, in line with commonly-used wording;
  • updating and aligning the equipment that can be installed under the various types of easement;
  • removing unnecessary wording, such as replacing the class of easement previously called “telecommunications and computer media” with simply “telecommunications”;
  • requiring the owner of the burdened land to act reasonably when the grantee seeks to install easement facilities; and
  • adding an implied electricity conveyance right in order to operate equipment installed under the easement powers (eg. a water pump).  
The Regulations also update the core information required to be used in land transaction forms. LINZ has provided template forms, although these remain inconsistent with each other and do not always contain the required core information.
 
New requirements for authority and identity
In conjunction with the Act and the Regulations, LINZ has issued new guidelines for authority and identity and the New Zealand Law Society has issued new authority and instruction forms. The guidelines and forms include greater detail about how clients instruct lawyers and conveyancing practitioners to electronically certify and sign land transfer instruments and how those instructions are required to be confirmed to be valid. In conjunction with the extension of Anti-Money Laundering requirements to lawyers, lawyers now play a key role in confirming that land transactions are free of fraud and other illegal activity.

If you would like further information, please do not hesitate to contact any of our property lawyers. Contact details can be found here.


Download as a PDF
Close window
x

Greenwood Roche Young Achiever of the Year Award 2018

We are pleased to continue to support the Property Council Southern Excellence Awards which recognise and celebrate excellence in property in the South Island.  Christchurch Partner, Ranui Calman had the honour of presenting the Greenwood Roche Young Achiever Award as part of the event on 5 October 2018...

Greenwood Roche Young Achiever of the Year Award 2018

News & Insights

Greenwood Roche Young Achiever of the Year Award 2018

Greenwood Roche Young Achiever of the Year Award 2018

We are pleased to continue to support the Property Council Southern Excellence Awards which recognise and celebrate excellence in property in the South Island.  Christchurch Partner, Ranui Calman had the honour of presenting the Greenwood Roche Young Achiever Award as part of the event on 5 October 2018.


Congratulations to Nick Flack of Christchurch International Airport, this year’s winner of the Greenwood Roche Young Achiever Award.  Nick is the Asset Planning and Maintenance Manager at Christchurch International Airport, where he has achieved outstanding performance and has made a significant contribution to the planning, construction and on-going maintenance of the Airport’s infrastructure assets.  He has shown focus, dedication and commitment, as well as grit and determination when faced with difficult situations.  He models a collaborative work style that brings together the organisation to translate strategy into action and has the promise of being a future industry leader.

Nick is currently part of the Strategy Action Leadership Group, which is responsible for turning corporate strategy into action.  He has a passion for commercial, operational and master planning as well as for driving long lasting solutions.  He creates clarity of purpose for his teams, articulating the Airport’s property and asset vision and then translating that vision into projects and maintenance plans.

The judges commented on Nick’s determination and motivation to achieve his goals as evidenced by undertaking full time study to complete his Masters in Logistics and Supply Chain Management, whilst also working full time.  He has also been an active member in South Island Logistics Forums, organised personal mentors to help him achieve his goals and completed leadership training, which he has been able to put into practice as part of the Senior Leadership Team.  The work Nick has been involved in has made a significant contribution to the whole of the South Island and the judges were impressed by how Nick sees the big picture, is future focussed and pushes boundaries to achieve his goals.  Nick embodies what this award seeks to recognise and celebrate and is without a doubt a leader of the future.

Congratulations Nick, we look forward to working with you and seeing where your career develop.


Download as a PDF
Close window
x

ILANZ Greenwood Roche Private Sector In-House Lawyer of the Year Award 2018

Greenwood Roche extends its warmest congratulations to Marise Winthrop, Corporate Counsel, Livestock Improvements Corporation (LIC).  The award recognises Marise’s significant contribution to both LIC and the legal profession...

ILANZ Greenwood Roche Private Sector In-House Lawyer of the Year Award 2018

News & Insights

ILANZ Greenwood Roche Private Sector In-House Lawyer of the Year Award 2018

ILANZ Greenwood Roche Private Sector In-House Lawyer of the Year Award 2018

Greenwood Roche extends its warmest congratulations to Marise Winthrop, Corporate Counsel, Livestock Improvements Corporation (LIC).  The award recognises Marise’s significant contribution to both LIC and the legal profession.


Marise manages the legal and intellectual property teams at LIC providing strategic and tactical options on the creation and protection of LIC’s growing portfolio of IP assets.

Greenwood Roche is proud to continue its support of ILANZ and to continue working alongside many of its members, providing pragmatic solutions in the delivery of various projects and initiatives that its members undertake.  In her speech at the awards, Greenwood Roche Partner Ranui Calman highlighted the increasing need for in-house lawyers to be innovative in their thinking, processes and their solutions. 

Greenwood Roche again wishes to congratulates all nominees and award winners on their various achievements throughout the year.


Download as a PDF
Close window
x

Digital Signatures and Storage - how and when they can be used?

From courier deliveries to agreements to purchase real estate, the emergence of digital signatures in commercial transactions has become increasingly prevalent over the past decade. The Contract and Commercial Law Act 2017 (Act) consolidated a number of commercial statutes (including the Electronic Transactions Act 2002). The Electronic Transactions Act 2002 aimed to facilitate the use of electronic technology by reducing uncertainty relating to its legal effect. The Act, by incorporating that same intention, promotes a more innovative commercial landscape by providing guidelines for the use of digital signatures and the digital storage of documents...

News & Insights

Digital Signatures and Storage - how and when they can be used?

From courier deliveries to agreements to purchase real estate, the emergence of digital signatures in commercial transactions has become increasingly prevalent over the past decade. The Contract and Commercial Law Act 2017 (Act) consolidated a number of commercial statutes (including the Electronic Transactions Act 2002). The Electronic Transactions Act 2002 aimed to facilitate the use of electronic technology by reducing uncertainty relating to its legal effect. The Act, by incorporating that same intention, promotes a more innovative commercial landscape by providing guidelines for the use of digital signatures and the digital storage of documents.


Digital Signatures

Digital signatures are a sub-category of the more general “electronic signature”. An electronic signature is any form of identification indicating acceptance in an electronic form. It may be a scanned version of a signature, the ticking of an “I Accept” option or a signature formed by a finger on a tablet or smartphone. In a New Zealand context, digital signatures are electronic signatures that generally comply with the Act. A digital signature’s compliance with the Act is authenticated by embedded software that provides assurances as to identification, reliability and of course, acceptance.

The Act provides that, subject to a few exceptions (such as affidavits, statutory declarations, powers of attorney, or wills) digital signatures are permitted under New Zealand law. The Act sanctions the general rule that any legislation requiring dealings to take place on paper will also be permitted to take place electronically, provided both parties agree and the dealings are not expressly excluded from the Act.

Section 226(1) of the Act states that a digital signature must:

  • adequately identify the signatory and adequately indicate the signatory’s approval of the information to which the signature relates; and
  • be as reliable as is appropriate given the purpose for which, and the circumstances in which, the signature is required.

To help provide certainty to users of digital signatures, the Act gives a rebuttable presumption of reliability if certain requirements are met. Section 228 provides that a digital signature will be presumed reliable if:

  • the means of creating the digital signature are linked to the signatory and to no other person;
  • the means of creating the digital signature were under the control of the signatory and no other person;
  • any alteration made to that information (or the digital signature itself) after the time of signing is detectable; and
  • the purpose of the signature is to provide assurance as to the integrity of the information to which it relates.
Essentially, a digital signature (as opposed to a mere electronic signature) will be presumed reliable as it generally meets these requirements.

Digital Storage

Continued technological innovations mean that many documents are never created in a paper form and many companies are looking to cut costs and increase convenience by storing information in digital, rather than physical form.

To cater for this, section 222 of the Act permits digital versions of documents as sufficient alternatives to originals where the digital version is “readily accessible so as to be usable for subsequent reference.”  Provided that a digital system reliably ensures that the integrity of the digital version is maintained, it may replace the original.

Where a document might be used for evidential purposes in a court, digital evidence is not barred.  However, it must meet the rules of evidence contained in the Evidence Act 2006 (EA) relating to hearsay and general reliability.

When retaining documents for use as evidence, clearly the objective must be to ensure that they are admissible. There is no restriction on the type of evidence a party may bring to prove its case in court, but there may be issues as to reliability. The definition of “document” in the EA is wide enough to encompass any form of digital document as it includes “information electronically recorded or stored, and information derived from that information.”

Under section 19 of the EA, a statement made in a business document is admissible in court, generally, if the person who made the statement is either unavailable to appear as a witness or the appearance would be significantly inconvenient due to cost or delay.

Conclusion
 
Digital signatures and digital storage provide an effective way for companies to save time and money in the digital age. Their trend of increased prevalence will surely only continue. It is important therefore, that parties have a good understanding of what constitutes a digital signature and when it may be appropriate. Likewise, parties need to understand the steps required to ensure digitally stored documents will withstand the test of time.  If you would like to know more, please contact Rowan Barbalich.
 


Download as a PDF
Close window
x