New Zealand Law Society - Law Reform

Law Reform

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Review of clean slate legislation needed

The New Zealand Law Society agrees that the Criminal Records (Clean Slate) Act 2004 should be amended to apply to people who have been sentenced to a custodial sentence of 12 months or less, after 20 years has passed since the date of last sentencing.

Responding to an invitation from Parliament’s Justice and Electoral Committee to provide a submission on a petition which requests that change, the Law Society says it also believes there is a need for a more comprehensive review of the Act.

It says the petition, of Eric Knight and 156 others, is consistent with the underlying intent of the legislation.

“Where a person has served a sentence and paid his or her debt to society, the ongoing penalty of discrimination or risk of disclosure of conviction should not continue to haunt the offender, unless there are sound public interest grounds for doing so.”

The Law Society notes that the Act does not expunge a conviction, but provides a framework for suppression of existence of the conviction.

At present the Act excludes individuals from being eligible under the clean slate scheme if any custodial sentence has ever been imposed on them.

“In the Law Society’s view, this blanket exclusion for any custodial sentence makes for a very narrow application of the clean slate scheme and precludes persons ... from moving forward with their lives free of the enduring consequences of a mistake in their youth that they have learned from and not repeated,” the submission says.

However, it says if a conviction is for a “specified offence” – sexual offending – the offender should continue not to be eligible for the clean slate scheme, in the interests of public safety.

In support of a broader review of the legislation, the Law Society says it needs to be analysed in light of developments in comparable jurisdictions such as the United Kingdom where the rehabilitation periods for clean slates were substantially reduced in 2014.

In New Zealand there is a standard rehabilitation period of not less than seven consecutive years from the date of last sentencing for the Act to apply.

The Law Society says the limitations on the application of New Zealand’s legislation for offences committed while a person is relatively young are a particular concern.

“There is ample evidence regarding young peoples’ cognitive development and that full decision-making capability is not reached until the mid-20s,” it says.

“However, the Act does not allow young persons to be eligible if a custodial sentence has been imposed (regardless of the length of that sentence).”

NZLS disagrees with NZIF exemption

The New Zealand Law Society does not favour granting New Zealand Institute of Forestry (NZIF) registered members an exemption from the requirement to be licensed under the Real Estate Agents Act 2008.

In response to the Ministry of Justice’s request for comments on the NZIF application for the exemption, the Law Society says there are several matters of concern.

“The Real Estate Agents Act is a sound consumer-oriented piece of legislation and it is preferable that those engaged in real estate agency work are governed by the Act rather than by some separate regime unless in the particular circumstances there is a compelling reason why a separate regime should apply,” it says.

While the NZIF Rules and Code of Ethics provide for various consumer protections, they are not specific enough in relation to a number of matters, the Law Society says.

Obligations under the NZIF Code of Ethics are not directed to disclosure of defects in land, and are open to interpretation particularly in terms of whether inquiry in respect of hidden or underlying defects would be necessary.

While real estate agents have an obligation under the Real Estate Agents Profession Conduct and Client Care Rules (REAA Rules) not to mislead customers about the price expectations of the client, there is no similar obligation in the Code of Ethics or NZIF Rules.

Also, while the NZIF Rules require members to inform their clients of any conflicts of interest in writing, there are no provisions concerning the form of consent that must be received by the registered members before proceeding with the work.

“The Real Estate Agents Act provides that real estate agents must obtain the consent of their client before carrying out work if a conflict of interest may exist, and such consent must be in a prescribed form and accompanied by the relevant valuation,” the Law Society says.

It also notes that the Act says lawyers or conveyancing practitioners carrying out real estate agency work are not entitled to be remunerated by commission in addition to, or instead of, their ordinary professional charges.

“The Law Society submits that consideration should be given to imposing the same restriction on registered members of the NZIF. There would appear to be no principled reason why a different approach should be taken to the charging of commission by registered members on the one hand and by lawyers on the other.”

Is national policy statement on urban development capacity necessary?

The New Zealand Law Society is questioning whether a National Policy Statement on Urban Development Capacity (NPS-UDC) is necessary.

In a submission to the Ministry for the Environment, the Law Society says it has several concerns about the proposal.

In relation to the NPS-UDC, it says planning under the Resource Management Act is about predicting and providing for the future and it is questionable whether a further instrument adds value.

“The National Policy Statement does not resolve the tension between containing development and permitting expansion. No clear guidelines are proposed in this respect,” the Law Society says.

Furthermore, the Law Society submission says the proposal fails to grapple with the issues of the infrastructure necessary to support development and without which development is constrained and frustrated.

“A narrow view is taken of ‘infrastructure’. For example, telecommunications and electricity are omitted from the definition. And more significantly, social and economic infrastructure necessary to support both residential and business development are omitted.

“The NPS also fails to address the significant challenges local authorities face in planning for climate change and the National Policy Statement needs to encompass and resolve these issues,” the Law Society says.

More thought needed on employee share scheme proposals

Not enough thought seems to have been given to the practical issues which will flow from enacting new employee share scheme taxation rules, the New Zealand Law Society says.

Commenting on an Inland Revenue issues paper on taxation of employee share schemes, the Law Society says they are widely used in New Zealand by a multitude of different employers and a large number of taxpayers participate in them as employees.

“It is imperative that proper consideration is given to the impact that new employee share scheme rules will have on participants before new rules come into effect,” it says.

The changes proposed by the issues paper will create a large number of practical issues that employers and their employees will need to grapple with.

Many of these issues are not discussed in the issues paper, the Law Society says, but they will be fundamental to the successful implementation of new employee share scheme legislation.

The issues paper does not discuss the interplay between the employee share scheme rules it is proposing and other legislation relevant to them, such as securities law and employment law.

The issues paper does not consider what will happen when a company has multiple employees who qualify for their employee share scheme shares at different times.

“Would, for example, there be a requirement that a company valuation be performed each time a Qualification Date for an employee arises?” the Law Society asks.

The issues paper also does not deal with the situation where employees progressively acquire shares under an employee share scheme at different times.

“There is no discussion of how dividend returns payable in relation to shares in an employee share scheme will be taxed while the employee is qualifying for the shares.

“Little attempt is made to identify or quantify the compliance costs that will arise for employees.”

The Law Society says it understands that it is proposed for the new rules to be implemented during 2017.

However, the Law Society says “it is critical” that the implications and practical issues are properly thought through and addressed before legislation in relation to employee share schemes is introduced.

Incorporated Societies draft bill supported

The general approach taken in the Exposure Draft of the Incorporated Societies Bill is supported by the New Zealand Law Society.

In a submission to the Ministry of Business, Innovation and Employment (MBIE) on the Exposure Draft, the Law Society says it strikes a workable balance between providing clear rules and guidance while still maintaining flexibility to adapt to fit the range of societies in existence.

“In particular, the Law Society supports the use of standard provisions which can be voluntarily adopted by societies and which act as a safe harbour for compliance.”

However, the Law Society points to some proposals in the draft which it says require amendment.

It says the process for amendment of the constitution should be changed to recognise that some societies may have imposed more stringent voting requirements for constitutional amendments, and also an amendment to permit proxy voting.

The proposed definition of the “committee” does not refer to the management role of the committee, and the Law Society says this should be changed to include it.

The Law Society also recommends that small societies – with fewer than 40 members or a turnover below a specified amount – should be exempted from some compliance requirements. It says this is because some of the proposed reforms would be unduly burdensome on small societies.

The obligation to provide information to members and the increased administrative duties this would entail are likely to discourage volunteers from participating and small societies should be exempt from compliance.

The Law Society recommends that small societies should also be exempted from preparing annual financial statements and an annual return.

“The Registrar may need to undertake spot checks to ascertain whether this exemption is being abused,” it says.

“However, this administrative burden will be balanced by the fact that the Registrar would not need to take receipt of the annual returns of each of these small societies.”

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