New criminal legal aid fees a welcome first step

New fees schedules for criminal legal aid announced on 19 February are a welcome step in the right direction, New Zealand Law Society Legal Services Committee convenor Liz Bulger says.

“However, the changes have been a long time coming and lawyers providing criminal legal aid have been seriously struggling with the overall economic viability of legal aid work,” Miss Bulger says.

The new schedules are contained in the Legal Services Commissioner’s report Criminal Legal Aid: changes to fee schedules – review responses and final decisions.

Miss Bulger says that the review has resulted in an increase of $4.92 million in the fees for criminal legal aid and that is pleasing.

“Criminal legal aid lawyers will be glad that some significant gaps have been addressed. It is good that fees will be introduced or increased where they have not been properly aligned with the new criminal procedure process.

“Unfortunately the changes will be phased in over three years. We had hoped for an immediate introduction and more substantial across-the-board increases, but the new schedules are a good first step.”

Miss Bulger said the New Zealand Law Society was able to provide input from around 300 lawyers in its December 2014 submission to the Legal Services Commissioner on the changes.

Criminal legal aid applications rose by 4.1% to 40,124 in the year to 30 June 2015 and made up 69% of all legal aid applications in that year.

Retention of lawyer financial advice exemption supported

The New Zealand Law Society supports an MBIE proposal to continue to exempt lawyers from the operation of the Financial Advisers Act 2008 in relation to financial advice that they might provide as part of their normal activities.

The Law Society has released its submission on the Options Paper Review of the Financial Advisers Act 2008 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

The submission agrees with Options Paper reasons for not changing lawyers’ exemption: that lawyers are already fully regulated under the Lawyers and Conveyancers Act 2006 and the associated regulations and rules, there is no evidence that the exemption has a detrimental impact on consumers’ financial outcomes, or in the professionalism of, or consumer confidence in, the financial advice industry.

“The Law Society has provided detailed guidance to lawyers in relation to what is considered to be ‘in the ordinary course of business’, and has seen no evidence to date that lawyers are ‘crossing the line’ from financial advice in the ordinary course of business,” it says.

Elsewhere in its submission, the Law Society says further work should be done to identify the benefits of amending the Financial Advisers Act to establish a sole professional body for financial advisers.

“A professional body could be responsible for licensing financial advisers and regulating conduct through setting and enforcing a Code of Conduct for Financial Advisers,” it says.

The Law Society says such a professional body could co-regulate with the Financial Markets Authority (FMA). The FMA would continue to have an important oversight role, while the day-to-day guidance and disciplining of financial advisers was managed through the professional body.

“It would be important to ensure the boundaries between the professional body and the FMA were clearly established to avoid any duplication of regulatory oversight.”

Financial service providers would remain regulated by the FMA under the fair dealing provisions of the Financial Markets Conduct Act and other regulators, such as the Reserve Bank, the submission says.

Considering ethical and client care obligations, the Law Society says all financial advisers should be required to put the consumer’s interests first. It says consumers would expect their interests to be put first when they receive financial advice from a professional.

“If an adviser puts his interests before the client’s interests it is not advice – it is a sale. It may even be mis-selling, exposing the adviser and financial service provider to liability under the Financial Markets Conduct Act.”

The Law Society says the legislation should be amended to make a clearer distinction between “sales” and “advice”.

Proposed statement of claim changes concern NZLS

The New Zealand Law Society says it is concerned about the potential adverse effects of changes proposed by the Rules Committee for striking out statements of claim before service.

The Committee’s paper Consultation on Striking out Statements of Claim before Service proposes a new rule to specify a procedure for a statement of claim which appears to be frivolous, vexatious or an abuse of process to be referred to a judge for consideration before it is served on the other party.

In a submission on the paper, the Law Society says it appreciates the difficulties that can be presented by statements of claim of the type described.

However, the potential adverse effects of the proposed amendments, and the potential implications for access to justice are concerning.

In particular, the Law Society says the proposal may:

• impose a responsibility on registrars which they are not equipped to carry out;
• deny plaintiffs the opportunity to be heard, and result in potentially meritorious claims being struck out; and
• create greater difficulties at the appellate level than it resolves at first instance.

The Law Society says whether a pleading meets the criteria in rule 15.1(1) is a matter of legal judgement, the initial assessment of which should not rest with a registrar.

It is also concerned at the lack of opportunity to present a case and does not consider there is a good reason to exclude the operation of rule 7.43(3).

“It is an extreme step to deny a claimant the opportunity to be heard at all in these circumstances,” it says.

“There is a real risk that a potentially meritorious but novel or inelegantly expressed statement of claim may be rejected as a result of the proposed rule change, thus unfairly denying a prospective claimant access to justice.

“There could also be irreversible consequences where limitation periods apply. A litigant whose claim had been struck out (without any opportunity to be heard) might not be able to recommence proceedings within the limitation period, and the court might be unaware of such consequences.”

The Law Society also notes that it is unclear how the proposed appeal procedure would operate in practice, with any appeal to the Court of Appeal without a reasoned decision from the High Court representing a departure from New Zealand’s adversarial court system.

NZLS suggests changes to residential land withholding tax bill

The New Zealand Law Society recommends that several changes are made to the provisions for residential land withholding tax (RLWT) in the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill to ensure there is better clarity.

In its submission to the Finance and Expenditure Committee on the bill, the Law Society also says it is regrettable that there are no details of the information the Commissioner of Inland Revenue intends to require vendors to give to their conveyancer in relation to RLWT.

It says the select committee should be given a full list of the information the Commissioner intends to prescribe so it can fully understand the extent of the information to be collected and certified by all vendors of residential land, and reviewed by the potential paying agent.

The Law Society says providing this information would allow a full appreciation of the compliance costs that the RLWT measures will impose on all residential land transactions.

Among the changes the Law Society recommends are clarification of the provisions affecting associated persons. It notes that while the definition of “associated persons” for the purpose of RLWT is presumably not to be limited to the same extent as it is for land provisions, this should be clarified.

The bill also needs to include a reference to “associated person” in the Income Tax Act’s defined terms, the submission says.

There is also the possibility of confusion for conveyancers in differences between the definition of “offshore person” in the proposed RLWT provisions, and the land information tax measures introduced by the Taxation (Land Information and Offshore Persons Information) Bill.

Clarification of the penalties for which conveyancers could be liable if RLWT provisions are incorrectly applied is also needed, the Law Society says. It suggests an amendment to clarify that the paying agent has no liability for a penalty if it was reasonable, on the basis of the certified information provided by the vendor, for the paying agent to consider that RLWT was not payable.

While the bill does not expressly state that agents may be liable for criminal penalties, as currently drafted it makes that an option. The commentary refers only to “general penalties”.

“The Law Society recommends that the penalties that the paying agent may be liable for are clearly stated, and that they should not include criminal sanctions,” it says.

NZLS opposes child sex offender name change bill

The New Zealand Law Society says a bill to prevent child sex offenders from changing their names should not proceed.

In a submission on the Births, Deaths, Marriages, and Relationships Registration (Preventing Name Change by Child Sex Offenders) Amendment Bill, the Law Society says it agrees with the Attorney-General’s comments in his New Zealand Bill of Rights Act 1990 report on the bill.

“While protecting vulnerable members of society from child sex offenders is an important social objective, the bill does not appear to advance this objective in a meaningful way,” the submission says.

“As any person may change their name simply by adopting a new name, all the bill can achieve is that persons convicted of a relevant offence cannot register that name. The prohibition on registration will not prevent child sex offenders from lawfully using other names in situations where use of a person’s registered name is not required, nor from committing identity theft or fraudulently using another name.”

The Law Society says the bill is also inconsistent with the right to freedom of expression affirmed by s 14 of the New Zealand Bill of Rights Act in a manner which is not justifiable in a free and democratic society.

It says there are alternative ways of achieving the objective of protecting vulnerable members of society from child sex offenders. These include identification of all applicants before a name change can be registered, improved information sharing across borders and across agencies, sentencing options such as extended supervision orders, collaborative multi-agency support for child sex offenders, and vetting of staff working with children.

Questions raised by employment mediation service proposals

The New Zealand Law Society has recommended that proposed changes to MBIE’s employment mediation services be trialled in one or more regional centres before being rolled out nationally.

In comments on MBIE’s proposals, the Law Society says prompt, locally provided mediation services are fundamental to resolving employment disputes effectively and efficiently and ensuring equitable access to justice.

MBIE’s proposals would implement a national approach to scheduling employment mediation by introducing a mixed resourcing model of permanent MBIE employees and contract mediators.

The Law Society says some lawyers, particularly those practising in Otago, Manawatu, Bay of Plenty, Gisborne and Hawke’s Bay, are concerned at the proposed loss of local offices and permanent mediators in those areas.

“Practitioners advise that mediators provide excellent services and consider that the mixed model contracting proposal risks reducing mediation services rather than enhancing them.”

The MBIE proposals were built upon a report by consultancy firm MartinJenkins. The Law Society obtained a copy of this report under the Official Information Act 1982.

It says a review of the report suggests that some of the base information relied upon is at odds with lawyers’ experience.

“This is not a criticism of MartinJenkins. But the absence of sound, accurate up-to-date data means there is a need to move carefully to ensure the problems have been accurately identified prior to seeking solutions.”

Contracting mediators from outside a region to deliver high profile/complex employment mediations may negatively impact availability, cost and quality for local clients, it says.

With the issues which have been identified, the proposed timeframe of decision-making by mid-March 2016 with a phase-in period of up to 12 months may not be sufficient to include robust testing of the model before it is implemented.

The Law Society suggests that trialling the model in one or more regional centres would be desirable.

MBIE has now announced its final decision. See www.lawsociety.org.nz/news-and-communications/latest-news/news/employment-mediation-services-changes-announced.

NZLS welcomes idea of different tax penalty approach

The New Zealand Law Society would welcome a different approach by Inland Revenue to penalties if it would mean changes in some of the current approaches.

In its comments on the discussion document Making Tax Simpler: Towards a New Tax Administration Act, the Law Society says the document looks at a new compliance model based on the view that taxpayer behaviour arises from a combination of capability, opportunity and motivation.

The document then flags the possibility that the new model could mean a different approach to penalties in future.

The Law Society points to some results which would be welcomed from such a change in approach.

These would include less frequent imposition of shortfall penalties for failing to take an acceptable tax position where the taxpayer has obtained professional advice before taking the disputed tax position.

The Law Society says it would also welcome “a reversal of the trend of Inland Revenue imposing and then only agreeing to reduce shortfall penalties in settling a dispute if the taxpayer pays all of the core tax and use of money interest assessed (without any willingness to settle for less than core tax and without any remission of interest).”

Incorporated Societies Bill

A consultation draft Incorporated Societies Bill has been released for public consultation, and submissions close on 30 June.

The draft bill closely follows the recommendations of the Law Commission’s 2013 Report, and aims to make societies better able to govern themselves and deal with disputes. This is the first major reform since the original legislation was enacted in 1908.

A copy of the proposed bill and of the request for submissions can be accessed at www.mbie.govt.nz/info-services/business/business-law/incorporated-societies/incorporated-societies-bill-exposure-draft. It should also be noted that societies registered under the Incorporated Societies Act 1908 and under the Charitable Trusts Act 1957 will be affected by the proposed new Incorporated Societies Act.

This is a brief summary of the key proposed reforms:

• societies will continue to be prohibited from operating for the financial gain of members;
• the minimum number of members will be 10 (corporate members counting as three individuals) on and after incorporation;
• members will not be liable for a society’s obligations;
• societies will be deemed to have full capacity to carry on or undertake any business or activity, do any act, or enter into any transaction;
• the list of what must be included in society constitutions has been expanded and “standard” recommended provisions are likely to be provided;
• societies must have a committee of at least three “natural persons”;
• every incorporated society will have a Registrar’s “contact officer”;
• statutory duties will be imposed on society officers;
• there will be detailed requirements about complaints and grievances and conflicts of interest;
• there will be statutory powers to require compliance with society constitutions;
• all societies will file annual financial reports with the Registrar; and
• amalgamations and mergers of societies will be facilitated.

The Law Society’s Commercial and Business Law Committee is considering the bill, and any comments or suggested submissions should be emailed to karen.yates@lawsociety.org.nz, preferably before the end of April.

Recent submissions:

The Law Society recently filed submissions on:

• Commerce Act: targeted review;
• Rules Committee consultation: Striking out statements of claim that are vexatious, frivolous or an abuse of process;
• Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill;
• Making Tax Simpler: Towards a New Tax Administration Act;
• Making Tax Simpler: Better Administration of GST and PAYE; and
• Financial advisers legislation review – options paper, Parts 1 & 2 (options for change).