Thomas Refoy-Butler

Qualifications

LLB / B.A (First Class Honours) University of Otago 2010
Admitted to the Bar of New Zealand 2010

Community & Industry Activity

Director – Omanu Beach Surf Lifesaving Club
New Zealand Law Society
Associate Member – Institute of Directors
Associate Member – Arbitrators’ and Mediators’ Institute of New Zealand
Australia and New Zealand Sports Law Association

Contact

DDI: +64 7 570 0693
M: +64 27 685 5395
E: thomas.refoybutler@hobec.co.nz

Thomas is an experienced litigator who provides strategic advice and representation to clients in commercial and regulatory disputes.

He has extensive experience in commercial disputes, including interim relief (injunctions and freezing orders), corporate insolvency and debt recovery, trust disputes, employment, professional disciplinary proceedings, and regulatory prosecution/defence and investigations. Thomas acts for parties and in disputes across New Zealand and has particular experience involving litigation in the primary sector.

He has experience as sole and junior counsel acting for private and corporate clients, including Crown entities in both civil and criminal proceedings in the District Court, High Court and Court of Appeal. He has also appeared as counsel in the specialist jurisdictions of the Family Court and Employment Court, and before various regulatory bodies such as the Licensed Building Practitioners Board and Alcohol Regulatory and Licensing Authority.

Thomas regularly works with the Independent Bar in Auckland and Wellington, providing litigation support, management and appearing as counsel as required.

In addition to his legal experience, Thomas has government experience in the sports sector with Board Appointments to Waikato/Bay of Plenty Athletics and the Omanu Surf Lifesaving Club.

Thomas is passionate about finding pragmatic and constructive pathways through complex disputes. He frequently sees significant benefit for his clients in alternative dispute resolution mediums, such as mediation and arbitration. He has also trained as a mediator through the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ) and is available to be engaged as a mediator by direct appointment.

Thomas Refoy-Butler's Expertise

Civil Litigation & Dispute Resolution

Thomas Refoy-Butler's News & Resources

What protection do you have as a business purchasing goods? Contract and Commercial Law Act

Everyone knows about the Consumer Guarantees Act 1993 (CGA), which provides a “consumer” with remedies if a business has failed to provide goods or services to a reasonable standard. But what happens if you are a business purchasing goods? The answer is not found in the Consumer Guarantees Act 1993; it is found in the Contract and Commercial Law Act 2017 (the CCLA). The CCLA implies seven conditions and/or warranties in a contract for the sale of goods: right to sell; conformity with description; fitness for purpose; merchantable quality; conformity with samples; rights of examination, and; acceptance. Not every breach of contract allows for rejection, but a trivial breach of a condition does. This means that a buyer can return goods supplied to a seller. Importantly, whether a term is a condition or a warranty depends on the construction of the sale of goods contract. An important implied condition is “fitness for purpose”. This means that goods must be reasonably fit for purpose. But, unlike the CGA, this condition will only apply where the buyer makes known to the seller the particular purpose for which the goods are required, and that the goods are of a description that it is in the course of the seller’s business to supply. What this means is that when a buyer of a vehicle makes known to the seller that they will be using a vehicle to tow a caravan, then there is an implied condition that the vehicle is fit for that purpose; towing a caravan. This was the case in Finch Motors v Quinn (No 2) [1980] 2 NZLR 519. Mr Quinn, the buyer, told the seller that he wanted a car for towing a boat on extended trips. The seller, Finch Motors, told Mr Quinn they had the ideal car for the job. Not long after the sale, Mr Quinn used his car to tow the boat when it overheated. This, the Court found, was a breach of the implied condition that goods are fit for purpose. There is also an implied condition that goods are of a “merchantable quality”. This is similar to “acceptable quality” under the CGA. The test for whether goods are of a “merchantable quality” is found in an old case, Taylor v Combiner Buyers [1924] NZLR 627. In that case, the Court asked the following question: Are the goods of such a quality and in such a state and condition as to be saleable in the market, as being goods of that description, to buyers who are fully aware of their quality, state, and condition, and who are buying them for the ordinary purposes for which goods so described are bought in that market? Unlike the CGA, the CCLA allows contracting parties to vary or exclude the implied conditions and/or warranties. This includes fitness for purpose and merchantable quality. To do this, the contract must be clear as to the conditions and/or warranties that it purports to vary or exclude. In Wallis, Son & Wells v Pratt & Haynes [1911] AC 394 (HL), for example, the seller’s terms and conditions stated that there is “no warranty express or implied”. The Court found that this did not exclude implied conditions, only implied warranties. If the seller wanted to exclude the implied conditions, including fitness for purpose and merchantable quality, they had to do so expressly. Holland Beckett has experience advising buyers and sellers. This is a complex area of law and Holland Beckett is available to assist.

Shareholder Disputes – you are not without options

Shareholder disputes are not uncommon. Yet, when they arise, a shareholder dispute is nothing short of disruptive, distracting and – usually - detrimental to business. While shareholder disputes can take various shapes and sizes, they most commonly involve a shareholder disagreeing with the way in which a company is being managed; or shareholders becoming “deadlocked”. Regardless, a shareholder has a range of options at their disposal to resolve disputes with fellow shareholders. The starting point for any shareholder dispute regularly involves an informal/formal meeting, mediation or arbitration. Each of these options has its merits and can be tailored to suit almost any shareholder dispute. It is also worth bearing in mind that shareholder agreements typically contain dispute resolution clauses. These clauses set out the process that must be followed to address disputes between shareholders. However, should these fail, a shareholder may need to file court proceedings. We explore the options available to shareholders under s 174 of the Companies Act 1993 (the Act). Oppressive conduct? Under s 174 of the Act, a shareholder may seek relief from the Court provided it can satisfy two elements. Firstly, proving that the affairs of the company have been, or are likely to be conducted in a manner, or the conduct of the company is, “oppressive, unfairly discriminatory, or unfairly prejudicial”. Secondly, the Court must consider it “just and equitable” to make an order for relief.[1] For the first element, the question is whether there has been a visible departure from the standards of fair dealing, viewed in light of the history and structure of the particular company and the reasonable expectations of its members.[2] Such a departure does not need to be conducted in bad faith.[3] The focus is on the conduct’s effect on the complaining shareholder. As such, s 174 is designed to provide a broad and flexible remedy for conduct which is unjustly detrimental on a shareholder. Unfair prejudice will arise in cases of company mismanagement, failing to facilitate a return for shareholders, excluding shareholders from participation and access to financial records, directors acting self-interestedly, and operating a company for the benefit of its parent. Green v Gillette was a recent case example in which the Court of Appeal made an order under s 174 of the Act.[4] Mr Gillette and Mr Green were shareholders in SunPower Limited. Mr Gillette was also employed by SunPower. When SunPower experienced financial difficulty, it ceased paying Mr Gillette’s salary, causing a deterioration in the shareholder relationship. Mr Gillette stopped working for SunPower and brought proceedings against it in the Employment Relation Authority. Subsequently, Mr Green incorporated a new company – “SunPower Solar Limited” – which acquired SunPower’s assets and workflow. Mr Gillette had no knowledge of these transactions. The Court had little difficulty finding that this amounted to unfairly prejudicial conduct. Other forms of unfairly prejudicial conduct can include “cash” or “asset” stripping. This can occur, for example, when a holding company charges illegitimate or overinflated management fees to its subsidiaries.[5] The Act also deems certain conduct as unfairly prejudicial.[6] Such “deemed” conduct gives rise to an irrebuttable presumption of unfair prejudice.[7] An example of this, is a failure to obtain a special resolution of shareholders in respect of a major transaction. Relief? What type of relief can a shareholder expect to receive from the Court? A “buyout order” by the majority shareholder is the most common remedy.[8] This is because cases often involve tightly held companies in which members can no longer do business together. That being said, a buy-out will not always be appropriate. If a shareholder (or director) devalues the company, a buy-out would not adequately resolve the wrong to the complaining shareholder.[9] A buy-out may not also be appropriate when a company is difficult to value.[10] Importantly, compensation may be awarded against director of companies, as “any other person” under s 174(2)(b).[11] The important point is that the suitable form of relief is that which repairs the actual harm done. The courts may also wind-up a company under s 174 of the Act. Having said that, such a remedy is considered “blunt” and “drastic” – especially when dealing with a solvent and successful business. A liquidator may be appropriate where steps need to be taken to recover funds properly owed to the company,[12] which could include a shareholder’s overdrawn current account. It may also be necessary to grant compensation alongside liquidation.[13] Conclusion All of this is to say that, while shareholder disputes are frustrating, you are not without options. The Companies Act 1993 provides other mechanism to address shareholder disputes and the above is an example of one such option. The above is only very general guidance and should not be relied on as legal advice. Companies Act 1993, s 174. Thomas v H W Thomas Ltd [1984] 1 NZLR 686; (1984) NZCLC 99,148(CA) at p693,155 (referring to the s 209 of the Companies Act 1955); affirmed in Sturgess v Dunphy [2014] NZCA 266 at [138]. Sturgess v Dunphy [2014] NZCA 266 at [139]. Green v Gillette [2022] NZCA 408 Oppenheimer NZ Ltd v Struthers [1994] MCLR 156. Section 175. Kim v Pink Nails Ltd HC Hamilton CIV-2009-419-1472, 11 August 2010. Sturgess v Dunphy at [148]. Kyle v Huapai [2014] NZHC 1981, at [14]. Hayes v Taniwha Buses Ltd [2014] NZHC 1965. See, for example, GJ Holding Trustee Ltd v Frith [2023] NZHC 563; and Maryatt v PC Home Hire Ltd HC Auckland M269-SD00, 2 September 2002; (2002) 9 NZCLC 263,033 at [92]. Ross v Smith [2012] NZHC 3034, at [24]. Kyle v Huapai Enterprises Ltd [2014] NZHC 1981, at [14].

Buying property with family – fun or potential fiasco?

In the present economic climate, getting into (or climbing) the property ladder is tough. To get a deal across the line, purchasers are increasingly looking to alternative ownership options. One such option we commonly see is ‘co-ownership’ of property between family members. Taking matters a step further than the traditional parental guarantee of a child’s purchase, we are now seeing co-ownership between multiple relatives (such as siblings and their spouses, or parents and all/some of their children). This is despite that not all owners intend to live in or maintain the property. While this sounds good on paper, unfortunately these arrangements often proceed without the appropriate documentation and can go wrong. Untangling them can be complex where there has been intermingling of purchase funds, family members not being treated equally, deaths occurring and relationships souring over time. What to do if you want to buy property with other people? If you are buying property with others (often who are not your spouse or partner), you should have a written agreement to cover key aspects. The terms can cover: ownership shares and monetary contributions to purchase (including bank loans); who will live in the property; who will pay property expenses and maintenance; what will happen if someone wants to sell the property and others don’t; what happens on death of a party; and how will any proceeds of sale be distributed. This way, if a dispute does arise there will be a clear path forward to minimise any fall out (if possible). Property Sharing Agreements are used to document these arrangements, which are simple but effective. Purchasers can also consider whether funds should be gifted or loaned. Our property lawyers can assist you with this process. You can also read our article on Gift v Loan. If you are wanting to buy property with your partner or spouse, there are a different set of questions and documentation to consider (for example, whether you need a contracting out agreement). Our dedicated family team can advise you on all aspects of relationship property. See also our article on Contracting Out Agreements 101. When it goes wrong A recent example of an undocumented family property purchase is the case of Boot (As Executor and Trustee of Estate of Hart) v Stephens [2023] NZHC 3863. Parents (the Harts) helped their daughter and her husband (the Stephens) buy a property. The title said that each couple owned a 50% share of the property, but in reality, the Stephens contributed more to the purchase price. They also paid for most of the property expenses in that time. Years later, both the Harts died, and their other five children wanted to sell the property so that 50% of the sale proceeds could be distributed to the children via their mother’s estate. The Stephens claimed that they were entitled to 67% of the property. Additionally, they had lived in the property for 17 years and did not want to sell. Ultimately, the Court held that, given the family’s intentions and contributions, the Stephens were entitled to 66% and could buy out the estate’s 34% interest. Regrettably, the dispute and litigation took a toll on the siblings’ relationships. If you own property with your family and there is a dispute There are a number of options to resolve a dispute if there is no written agreement, including obtaining Court orders to force a sale under the Property Law Act 2007. First and foremost, our experienced litigation lawyers can help you to resolve matters before Court through negotiation or mediation, if possible. If negotiations are not successful, we can guide you through the litigation process.

New Firearms Registration Law

The second phase of the firearms reform process that began in 2019 reached a new milestone on 24 June 2023 with the introduction of the Arms Amendment Regulations 2023. The new firearms registry set up under the Regulations is administered by the Firearms Safety Authority. The Authority launched in late 2022. It works with the Commissioner of Police to provide a range of services related to firearms registration. The registry will progressively impose reporting requirements on New Zealand’s 240,000 licenced firearms owners over the next five years. For simplicity, in this article, we refer to “guns” and “weapons”. But these obligations apply to all “arms items”: firearms, magazines, pistols, restricted weapons, ‘major parts’, and pistol carbine conversion kits. The Regulations do not currently require the registration of other parts which require a firearms licence to purchase. This includes grips, frames, chassis systems, flash suppressors, and silencers. Firearms that are inoperative do need to be registered. The only exclusions are antique guns, and airguns (except for “especially dangerous airguns”). Guns are classed as antiques if manufactured before 1899, are held solely as antiques, and if incapable of firing rimfire and centrefire ammunition. Firearms dealers are subject to somewhat more onerous obligations, and required to register their stock before 24 June 2025. The Authority will proactively contact dealers to advise them how to register their stock. From 24 June 2023, gun owners can voluntarily register their weapons at any time, either by setting up a MyFirearms account on the Authority’s online portal (which allows use of the RealMe service already in use by IRD and other departments), or by phone (freephone 0800 844 431). To register, gun owners will require details of their firearms licence, and the identification details for their weapons (including manufacturer, year of manufacture, action, calibre/gauge, and serial number). Any custom made weapons or other items without identifying marks will need to be registered over the telephone. All gun owners will need to have registered their weapons with the Authority before the close of 31 August 2028 by the latest. However, an earlier deadline can apply in some circumstances. Gun owners will need to take care of registration earlier than 31 August 2028 if: They apply for a new licence, endorsement, or licence renewal. New licence holders will need to register their guns when they get their licence. Renewing owners have 30 days after the renewal to register their guns. They buy, sell, supply, or receive a gun. The item that changes hands must be registered as soon as practicable after the weapon changes hands, and they must register all of their guns (even those not changing hands) within a month after the transfer. They import a gun. That item must be registered within 30 days after the gun is released by customs, and all their other weapons must be registered a month after that same day. They manufacture or export a gun. That item must be registered within five days after the export or manufacture is complete, and all their other weapons must be registered a month after that same day. They notify the Police that they have lost a gun, had one stolen, or have destroyed a firearm. In that case, they will need to register that gun immediately, and their other weapons within 30 days after that gun was lost, stolen, or destroyed. Ammunition does not need to be registered. However, if a gun owner buys ammunition after 24 June 2025, they will need to register all weapons within their possession within 30 days after the purchase. There is no charge for registering a firearm. Where a gun changes hands, the obligation to register the change in ownership is with the person making the transfer (ie. the seller or person giving the gun away or exporting it). If a licenced firearms owner has no items in their possession, they will still be required to register and declare “No Arms Items”. Guns can only be registered to one licenced owner. If a person is responsible for a weapon for a club, range, organisation, or business, they will need to register the firearm against their licence. If a gun is being loaned or given for safekeeping to another licence-holder for less than 30 days, the transfer does not need to be registered. Any longer term loans will need to be registered by the person handing over custody of the weapon. Gun owners who fail to register their weapons in a timely manner face a fine of $10,000, even for unintentional breaches of the regulations. Deliberately failing to comply the rules can lead to fines of $20,000, or up to two years in prison. So, if in doubt, it will pay to seek advice. The information held by the registry (ie. the firearms owned by a licence holder) will be accessible by the Police when carrying out their lawful duties. Upon request, holders of firearms licences and dealer’s licences to view their own information and confirm/verify the licence, endorsement, and permit status of any person they are buying or selling firearms to. However, they will not be able to see what firearms are owned by the other party. If in any doubt over your registration obligations, or if you have any questions at all related to firearms and the law, Holland Beckett Law’s wide-reaching practice – from criminal to civil, from city to country – allows us to provide the answers you need.

Don’t hit ‘Send’ on a lawsuit – some hidden pitfalls of being online

“If you’ve got nothing nice to say, say nothing at all” may be an old adage, but it still has force in the social media age. Seemingly ancient legal concepts can bite in unexpected ways for those freely expressing their opinions online. Some may be familiar, such as defamation and harassment. Others, like malicious falsehood, and the Harmful Digital Communications Act (HDCA), are less familiar. But they can all have significant consequences, and can even lead to criminal charges. In this article, we highlight some of the do’s and don’ts for interacting online. One of the major possible pitfalls is the law of defamation. This is the area of law aimed at protecting reputation. It enables someone who believes they have been unfairly disparaged to sue to regain their standing. Large sums can be awarded by way of compensation where defamation is established. The obvious tension between this ability to sue and freedom of speech has seen the boundaries of defamation gradually pushed back in recent decades. There are now a number of defences to these claims aimed at protecting those expressing their honestly held opinions and providing fair comment on matters of public importance. Truth is also a defence to defamation. But succeeding in using one of these defences can be challenging, and a good defence is second best to not being sued in the first place. The law is technical, but taking some basic steps can avoid a lot of upset: Where stating something about a person as a matter of fact, ensure it’s true. Avoid repeating rumours, gossip, and innuendo: those repeating defamation can be sued just as much as those originating it. In stating an opinion, ensure that you’re putting forward what you honestly think, and that you’re basing it on facts that you’re clear are correct. Avoid exaggeration or aiming to be malicious. It’s also easy to stray into making statements of fact in offering up an opinion. If you’re in charge of a page on social media, ensure you review it regularly and remove anything potential defamatory you find. There’s been a number of examples of page hosts being targeted for ‘permitting’ defamation to spread on their watch. This includes where you’re posting a review of a business, leaving feedback on someone on TradeMe or TripAdvisor, recounting your experiences of an employer, or commenting on a news article you’ve seen online. Businesses can also run into difficulties in with defamation (not to mention consumer and intellectual property law) in offering comparisons between their own products and services and those of their competitors. For example, Local toy manufacturer Zuru recently had to respond a claim by Lego that Zuru had breached trademark law in saying its products were compatible with Lego. Though Zuru succeeded, it will have incurred significant costs, and uncertainty, in defending the lawsuit. One of the areas that can give people grief with defamation is the fact you can be found liable even if you didn’t mean to do harm. Other parts of the law respond to those who do set out to cause loss or offence. Injurious falsehood allows someone to sue to be compensated for financial loss they have suffered as a result of lies knowingly told about them. While more limited in scope than defamation, there are fewer available defences than in defamation. Not all processes are focused on financial compensation, and some can involve the criminal law. An application can be made for a harassment order by the target of repeated hostile posts on electronic forums. Compared to claiming financial compensation, harassment orders are reasonably easy to obtain. Breaching a restraining order is a criminal offence, punishable by six months’ imprisonment or a fine of $5,000. The HDCA is perhaps the widest-reaching, and most potent, tool available for regulating online conduct. Any conduct found to be likely to cause serious emotional harm because it is menacing, grossly offensive, indecent, harassing, or malicious can give rise to an order under the HDCA. The District Court, in making an order, can compel harmful content to be taken down, and an apology made. The same penalties apply for breaching an order under the HDCA as with a harassment order. In particularly serious cases, the posting of the harmful communication itself can be punished by 2 years in jail or a fine of $50,000. At the same time, while seeking to protect people online, the Courts are sensitive to the values of freedom of expression. These laws are applied in a manner that balances that right. The above is only very general guidance and shouldn’t be relied on as legal advice. If you run into any of these unexpected pitfalls online, or feel you have been the target of harmful or inaccurate communications, Holland Beckett’s dispute resolution and litigation team can help.

Fencing – rights and obligations for neighbours

Neighbours are commonly grappling with issues about their fences: one neighbour may want to upgrade a boundary fence and the other refuses to pay their fair share, you may find out that your boundary fence is not on the true boundary of your property, or your neighbour may have built a fence which obstructs your view. Not only does this cause headaches, it can present real problems when you want to sell your property. What may seem like a trivial matter can turn into a lengthy and expensive dispute – often at the expense of your good neighbourly relationship. It is therefore important to know your rights and obligations when it comes to fences. Fencing Act 1978 Property owners can enter into agreements or covenants regarding fencing matters, which may be registered against the title of a property. If that happens, subsequent owners would be bound by the agreements, and future grievances could be avoided. However, if an agreement has not been reached, most of the law relating to fences is contained in the Fencing Act 1978. Building or repairing a fence – who bears the cost? Fences should generally be on a boundary line, and the cost of erecting, maintaining or relocating a boundary fence shared equally between the neighbours. You can compel your neighbour to share the cost under the Fencing Act, provided certain procedures are followed. There are some exceptions, however, such as where one neighbour damages the fence: they cannot then expect the other neighbour to pay half the cost of repair. Another example, common in some new subdivisions, is where there is an agreement or covenant on the title exempting an owner (usually the developer) from contributing to the cost of a fence. Replacing a fence - is the fence adequate? Your neighbour will only need to contribute to the cost of replacing a fence if the existing structure is not already “adequate” (meaning of a nature, condition and state of repair reasonably satisfactory for the purpose it serves or is intended to serve). Whether or not an existing fence is “adequate” will depend on a number of factors, including the location of your property (rural or residential) and the nature of the fence (hedge or wall). However, your own personal desires or expectations are not normally relevant. If there is a dispute about whether the existing fence is “adequate” it may be necessary for the Disputes Tribunal to determine the issue. What if it is not in the right place? Disputes surrounding boundary fences can become complex. A formal survey is usually required to identify the parts of the adjoining properties that are incorrectly marked by the fence. If a fence is not on the true boundary, one party may decide to build another fence on the boundary line, and the other party may be liable for half the cost. Or, if a fence encroaches one neighbours property, they may require the fence to be relocated. This can become a real issue where one party wants to sell their property. If the parties cannot agree to relocate the fence, the affected neighbour may apply to the Court for an order to remove or alter the fence which adversely impacts their land. Procedures Whether or not your neighbour agrees to your proposal to repair, replace or erect a fence, you must issue a fencing notice. A fencing notice puts your neighbour on notice of the proposed work and costs, and you must give them 21 days to respond. If your neighbour does not respond to the fencing notice within that time, you may commence the work and your neighbour can’t object later. If you fail to give your neighbour notice of your proposed work, you could be liable to pay for the costs of the fence yourself. There are some exceptions to this, such as if immediate work is required as a result of a fence damaged or destroyed by an accident. It is always important that you identify and notify the correct person: either the owner of the property, or an occupier by virtue of a tenancy not less than 10 years. This can be complicated if the neighbour is a unit title or cross lease. If the correct procedure is not followed, you may find yourself having to pay the full costs of the fencing work, or having to apply to the Court to help resolve the issue. To avoid this, we recommend you seek legal advice before issuing a notice or starting fencing work. Holland Beckett has experience in fencing disputes and would be happy to provide you with our advice on your situation. For example, we can assist with drafting fencing notices, lodging claims in the Disputes Tribunal or District Court, and providing general advice on your liability to pay the costs for an adjoining fence.

Mandatory Farm Debt Mediations – what you need to know

A new law has come in affecting how creditors can take enforcement steps against borrowers and guarantors of farm debts. The Farm Debt Mediations Act 2019 (FDMA) came into force in 2020, which prevents secured creditors from taking enforcement action in relation to farm debts without taking certain steps. What is a farm debt? A “farm debt” is defined as being: a debt owed by a farmer (a person involved in a primary industry or a debtor where the debt was incurred to conduct a primary production business) as principal debtor or guarantor; incurred for the purpose of conducting a primary production business (eg. horticulture, agriculture, aquaculture, including businesses such as sharemilking but does not include forestry, mining or providing labour/materials to a primary production business) or related activities; and secured wholly or partly in farm property (being any property used in connection with a primary production business. Property can include vehicles, animals, resource consents) What is an enforcement action? “Enforcement action” includes appointing a receiver, serving notice under s119 of the Property Law Act 2007 to exercise powers of sale, taking possession or assuming control of the farm property or applying to liquidate or bankrupt the farmer. A letter advising of a default and reminding the debtor to make payment is not an enforcement action. When can ‘enforcement action’ be taken by a creditor? A secured creditor can only take enforcement action in relation to the farm property when either: an enforcement certificate is in force in relation to the relevant farm debt. A creditor can apply to MPI for a certificate if the farmer declined to attend mediation or the creditor attended mediation with the farmer in good faith. An enforcement certificate lasts for 3 years; or the parties have entered into a mediation agreement in the past 3 years. If any of enforcement steps are taken without an enforcement certificate or mediation agreement, the enforcement steps will be void. If the farmer obtains a “prohibition certificate”, a creditor cannot take any enforcement action for 6 months. The farmer can apply to MPI for a prohibition certificate if the creditor declined to mediate or did mediate but not in good faith. Action could be taken against non-farm property (of the farmer) secured under a farm debt, or potentially against farm property (of the farmer) if the farmer is insolvent or subject to insolvency proceedings. However, action cannot be taken against a guarantor in relation to any kind of property, farm or non-farm unless an enforcement certificate or mediation agreement is in place. If there is an urgent need to protect a creditor’s interests, the creditor can apply to the High Court to appoint a receiver. Mediation Generally, farmer and a creditor can both request mediation, although a farmer can request one at any time and the creditor can only request one once the farm debt is in default. The mediation process is confidential. There are specific formalities and procedures under the FDMA, including that: the request must be in writing; the other party (‘respondent’) must respond to the mediation request within 20 working days. If they do not reply, they are deemed to have declined mediation; if the respondent responds by declining to attend, they must set out the reasons why; a creditor must agree to mediation unless there is good reason; and unless the parties agree, the mediation must occur within 60 working days of the request. A farmer can only be asked to contribute up to $2,000 towards the cost of the mediator, and a creditor must meet it own costs of the mediation process. The legislation indicates that any of the creditor’s mediation related costs cannot be recovered from the farmer in any way, which would override standard contractual cost indemnities. The parties must mediate in “good faith”. If a creditor declines to attend mediation without good reason or without setting out its reasons, that will be evidence of ‘bad’ faith. The legislation also indicates that a creditor refusing to reduce or forgive a debt, or alter the loan terms, could be evidence of bad faith, but not on its own. What now? The FDMA applies to all farm debts, irrespective of when the debt was incurred. The FDMA cannot be contracted out of. As this legislation is brand new, it has not yet been interpreted by the Courts, so it will be interesting to see it work in practice. Holland Beckett has expertise in rural law and can advise you on the impact of the FDMA on any farm debt, and assist you to navigate the mediation and enforcement process.

Update on trust law – can a trustee consider settlor wishes or other trust benefits?

Trustees and beneficiaries of trusts should be aware of a recent court decision, which clarifies two factors that trustees can take into account when deciding whether to distribute trust assets. In December 2021, the Court of Appeal’s decision in Kain v Public Trust [2021] NZCA 685 has given trustees some guidance on whether two types of factors can or should be considered by trustees. These are: A settlor’s wishes after the trust was established; and If a beneficiary has received (or can expect to receive) a benefit from a separate but related trust. Settlor’s later wishes When establishing a trust, a settlor expresses their intention (or wish) for how the trust’s property is to be used. Later on, a settlor may convey further or different wishes for the way in which they want the trust property to be used. The Court of Appeal held that: A trustee is entitled to take into account wishes and subsequent wishes if they are consistent with the terms and purpose of the trust. To do this, a trustee can read and understand these wishes; and If the more recent wishes are inconsistent with the settlor’s original wishes, a trustee can consider the more recent wishes, however it is a matter for the trustee’s discretion to actually give effect to those recent wishes (in effect overriding the original wishes). An example would be, as in the Kain case, if there is a statement by the settlor wanting equality between beneficiaries that is not contained in the trust deed. Depending on the circumstances, this wish for equal treatment may be able to be taken into account by a trustee, but those wishes do not have to be followed. Interrelated Trusts The Court of Appeal confirmed the general principal that a trustee must take into account all relevant considerations, and not take into account any irrelevant ones. The Court then held that where there are multiple trusts that are related (ie. are connected to one family group), it can be relevant what a beneficiary has received (or might be expected to receive) from a related trust. But it is not a requirement to do so. For example: There are two trusts relating to the Smith family, Trust A and B. Peter is a beneficiary of both. Mary, the trustee of Trust A, wants to make a decision in relation to Trust A’s assets. Peter has received a house from Trust B. Mary can take account of the house which Peter has received from Trust B when making her decision, but she does not have to. At Holland Beckett, our litigation and estate lawyers can guide trustees through making difficult decisions, or can give advice to beneficiaries about decisions that have been made by trustees if you think the decision is wrong. Please do not hesitate to get in contact.