Overview of the New Zealand legal system

New Zealand's legal system is based on English common law and the country's own laws and statutes, which are always evolving. This “Westminster” style system means there is often foundational legislation for a subject set created by its elected body (parliament) while interpreting and applying the law in the event of disputes is left to independent judges. New Zealand and England’s systems have diverged over the last generation; England, being part of the UK, before Brexit had converged to some extent with applicable European-wide directives, while New Zealand, in a completely different context, has continued to incorporate the principles of the Treaty of Waitangi into its legal framework. New Zealand’s common law (law created and developed by judges rather than parliament) has also diverged from England over time.

Here is a brief overview of the legal framework of New Zealand:

Constitutional Law: New Zealand is a constitutional monarchy with a parliamentary democracy. The reigning monarch of the United Kingdom is its head of state. The Constitution Act 1986 is the principal legislation that governs the operation of the New Zealand government, including the roles and powers of the monarch, the Governor-General, and parliament. The Treaty of Waitangi, created in 1840, is an important source of constitutional obligations between the state and the Tangata Whenua of Aotearoa. The Constitution Act is functional legislation that talks about how things work. It is not a source of constitutional obligations in itself.

New Zealand has an unwritten constitution which is greater than the sum total of its parts. Those parts are: the Bill of Rights Act 1990 (see below), its electoral system inclusive of its traditional customs and procedures, its judicature legislation (see below) and other relevant legislation such as the Human Rights Act 1993 (see below).

Electoral system: New Zealand is a democracy. It has a general election every three years. It is a “mixed-member proportional (MMP) system where there are a fixed number of electorates, 60, and then an adjustment to reflect the overall vote. This usually results in a parliament comprising 120 members. A political party must receive at least 5% of the total votes before getting getting a seat if it does not win an electorate seat.

Court system: The High Court is a superior court of unlimited jurisdiction whose function is to administer the laws of New Zealand within the boundaries set by the Senior Courts Act 2016. Its broad jurisdiction includes: public law; applications to review a decision made by a public/ state body, writs of habeus corpus, appeals from inferior courts/ tribunals, applications for declarations as to rights and remedies under legal documents and statute, the hearing of certain criminal trials, and common law civil claims such as tort and contract. The Court of Appeal is an intermediate court of appeal which considers appeals against High Court decisions. The final court of appeal is the Supreme Court, whose initial permission is needed to bring an appeal.

The inferior court is the District Court. Unlike the High Court, it has no inherent jurisdiction. Its powers are explicitly set out in the District Courts Act 2016 and related regulations. As discussed further below, it deals with all criminal proceedings except the most serious. Its monetary jurisdiction to hear civil claims is fixed (at the time of writing: NZ$350,000). The Family Court is part of the District Court (see below).

Human Rights Law: The New Zealand Bill of Rights Act 1990 outlines the fundamental human rights and freedoms for people in New Zealand. It is ordinary, not enshrined, legislation. The Human Rights Act 1993 prohibits discrimination on the basis of race, gender, age, religion, sexual orientation, and other factors. The Human Rights Commission is responsible for promoting and protecting human rights in New Zealand.

Criminal Law: The Crimes Act 1961 records serious criminal offences, as well as the penalties for these offences. The Ministry of Justice oversees the criminal justice system and works to ensure that it operates fairly and efficiently. The courts are responsible for determining guilt and sentencing offenders. Most criminal law is dealt with in New Zealand’s District Court. Serious crime, such as murder, is dealt with in the High Court.

Family Law: The Family Court of New Zealand handles a range of family law matters, including divorce, custody, and child support. The Care of Children Act 2004 outlines the legal responsibilities and rights of parents and other caregivers in relation to children. The Property (Relationships) Act 1976 (the PRA) regulates what happens to property upon separation. The PRA is intended to be a code of all of the applicable law affecting this subject matter. (Whether it has that effect is debatable—a subject for another time.) The PRA is scheduled to have a watershed law reform. At the time of writing, this has not occurred, but is predicted to occur within the next two parliamentary term, so by 2029.

Employment Law: The Employment Relations Act 2000 governs the relationship between employers and employees in New Zealand, including minimum wage rates, holiday and sick leave entitlements, and the right to join a union. MBIE is responsible for enforcing employment laws and ensuring that employees are treated fairly, from a regulatory perspective. The Employment Relations Act 2000 is intended to be a code. This means it is intended to be a complete record of all employment law.

Commercial Law: The Companies Act 1993 outlines the legal requirements for setting up and running a company in New Zealand, including registering a company, issuing shares, and filing financial statements. The Commerce Commission is responsible for promoting competition and protecting consumers in New Zealand's markets. The Contract and Commercial Law Act 2017 is close to a code for the law of contract in New Zealand. The Fair Trading Act 1986 contains laws prohibiting misleading conduct in trade. It provides for civil remedies as well as offences which can be enforced by the Commerce Commission.

Environmental Law: The Resource Management Act 1991 (the RMA) outlines the legal framework for managing New Zealand's natural and physical resources, including land, water, and air. The Ministry for the Environment is responsible for developing and implementing environmental policy, while regional councils are responsible for managing local environmental issues. The RMA is due to have a substantial reform. It is not imminent but should occur within the next 5 to 10 years.

Intellectual Property Law: The Intellectual Property Office of New Zealand oversees the registration and protection of trademarks, patents, and other intellectual property rights in New Zealand. Legislation regulating trademarks is the Trademarks Act 2002. The Copyright Act 1994 outlines the legal rights and responsibilities of creators and users of copyrighted material. The Fair Trading Act’s prohibition on misleading conduct is a vehicle by which people sometimes protect IP rights, as is the common law tort of passing off.

IAG v QBE: a Case of No Interest

Interest is intended to reflect the wrongdoers’s use of money pending judgment while the claimant has been out of pocket. This intention reveals the true nature of an award of interest. It is restitutionary. Its restitutionary nature is intended to address the passage of time between the event giving rise to primary liability to the date a Court determines the existence of that liability. At the time primary liability accrues, the claimant is worse off. The intention of a judgment is to, as far as legal theory allows, make the claimant whole. A claimant may do things that unduly delay the date of determination. During these periods, the clock is paused. This makes sense seeing as the liability to pay interest is contingent upon a determination which at that time has not yet occurred. The claimant in this sense does not sit on an accrued obligation awaiting vindication but rather he has elongated the passage of time. Money matters. Time matters. It is the combination of money’s objective value and also the passage of time which compel a restitutionary award of interest.

The High Court in Sleight v Beckia Holdings Ltd [2020] 2020 2851 (the substantive decision regarding primary liability) and [2021] NZHC 456 (the decision considering interest and legal costs) grappled with this topic in a claim against an insurer responsible for rebuilding an insured’s residential dwelling after damage caused by the Canterbury earthquakes. Following the earthquakes, the insurer, IAG, entered into a contractual partnering-type arrangement with a construction company, Hawkins. The then dire circumstances dictated this kind of arrangement because without it the insurer would have found it impossible to meet its commitments to its many affected customers. A builder, Farrells, rebuilt the property under the auspices of this IAG/ Hawkins arrangement. The repairs proved to be defective. A debate about who was responsible ensued. In the end, the insureds sued; the builder, Hawkins’ liability insurer QBE seeing as Hawkins was by that time in liquidation, and IAG.

There was a trial in July 2020. The necessary remedial works had not occurred.

The HC Court determined that Farrells was liable to the insureds in contract and in negligence as well as under the Consumer Guarantees Act 1993 for its defective and inadequate repair work. Judgment was entered for the cost of the remedial work using present-day rates. IAG was liable under the insurance policy. The High Court awarded interest back-dated to 2015 when the repairs were carried out.

In IAG v QBE [2022] NZCA 208, the Court of Appeal disagreed with the interest award. It noted that the monetary award to the insureds was on the basis of current (i.e., around the time of trial in mid 2020) rates, not 2015 rates. There is a line of authority which holds that where present-day costs are awarded, interest should not run from the earlier relevant period. The reasoning is that an award of interest would duplicate an allowance already built into the damages calculation. The gain to the defendant is removed because it has to pay a higher sum now that it would have had to earlier and the loss to the plaintiff is removed because it will recover more than the loss at the time it became entitled to payment initially. Call this the balancing principle.

The Court of Appeal decision records that the insureds contended that notwithstanding this line of authority, an award was possible in accordance with the Court’s broad jurisdiction under the then applicable s. 87 of the Judicature Act 1908 (which is carried forward into its successor legislation). The Court was not satisfied that there should be any departure from the balancing principle just described. It allowed the appeal. No interest.

This is unfortunate. While application of the balancing principle addressed the financial aspect, it did not address the temporal aspect. The subject matter of the claim was the insured’s home, the full enjoyment of which they were deprived for many years. Reasoning that it makes no difference because the cost of the works has increased in the meantime (reflected in an increased monetary award) has an unfortunate air of sophistry about it. An award of interest was necessary to make the claimants whole.

It’s times like this that you lean back in your chair and ask yourself: what would Lord Cooke of Thorndon have done? One is moved to suppose that he would not have felt so constrained, preferring instead to permit the judge at first instance to exercise a discretion to do justice in the particular case before him.

This is not to criticise the insurer. There was a genuine issue to be tested about the rights and responsibilities between the parties. It is far from a sure thing, in my opinion, that the insurance company had the responsibility the Court found it did. It funded the works and did everything it could. If it could turn back time there is nothing it could have done differently. However, once the law was revealed, a necessary conclusion was that the insureds had been deprived of something to which they otherwise would have enjoyed, the full use of their home. Under New Zealand law, this could not be addressed fully by an award for stress and inconvenience. Awards in New Zealand have always been…what is the word. Thrifty. Interest is the legal tool that best assists.

The balancing principle lacks cogency in this situation. The damages award was higher because of the price inflation of building costs. It is fallacious to say that the detriment to the insureds was obviated. They had to wait five years to get the situation sorted. Time has a value. Time had passed. This detriment should be recognised.

In the image below, children play ball; unencumbered by these questions.

Civil Litigation for Non-Lawyers: a new book

Access to Justice

It has been my pleasure to edit and publish via The Legal Drive a book written by Hamilton barrister Martin Dillon called Civil Litigation for Non-Lawyers. It does what is says on the packet. You can buy it as an e-book or as a hard copy on Amazon. If you are buying a hard copy order it from the US (.com) Amazon site.

See link below.

Civil Litigation for Non-Lawyers: a plain English guide to civil Court cases in New Zealand

By L. Dillon, Martin

Buy on Amazon

Shareholder disputes

The Legal Drive Ltd has published its first book:

Covid-19: contract frustration

Here's a discussion between fellow FortyEight Shortland barrister Rob Latton and myself about the doctrine of frustration of contracts in the context of C-19 in NZ.

Contract frustration is a common law concept. Where a contract becomes impossible to perform or performance of it becomes radically different to what was reasonably contemplated at inception, it may be regarded as frustrated and therefore at an end.

The specific consequences of frustration and the linked powers of the Court are dealt with in the Frustrated Contracts Act 1944, now enshrined in the Contract and Commercial Law Act 2017 from s. 60 onwards.

Common law tells us if the contract is frustrated, the legislation tells us what should happen as a result.

COVID-19: the administration of oaths

The New Zealand Law Society has obtained an opinion on the administration of oaths (for example, for affidavits) where there is no in-person contact, and the communication occurs remotely.

Here is a link to the opinion the NZLS website:

https://www.lawsociety.org.nz/practice-resources/the-business-of-law/legal-practice/opinion-administration-of-oaths-and-declarations-in-circumstances-of-mandatory-self-isolation

The author Paul Collins notes that the applicable rules of Court in New Zealand—the District Court Rules 2014 and the High Court Rules 2016—incorporate the requirements of the Oaths and Declarations Act 1957 which plainly does not contemplate nor permit any kind of “remote” attestation.

He notes that the Epidemic Preparedness (Covid-19) Notice 2020 (the Notice) permits judges to “ modify any rule of court to the extent necessary in the interests of justice.”

The author suggests a procedure to adopt which is intended to ensure the integrity of the system of formally proving documents, as far as it is possible to do so in the unprecedented circumstances of the pandemic. It is to be noted that this is a suggestion and not a prescription; there is no statutory prescription, the Notice is deliberately very broad.

The suggested procedure is that the lawyer consider whether a certificate signed by the lawyer is appropriate, to provide a measure of assurance to a judge or other body required to considered the attested document. This is the sample certificate attached to the advice, which is publicly available:

Download a sample certificate - to be adapted as required - based on the above comments.

The author states:

Before deciding whether to provide a certificate, any lawyer being asked to administer an oath or declaration remotely should also consider the following matters:

• The lawyer will need to be satisfied about the quality of the remote conferencing facility (Skype, WebEx, Zoom, or similar, referred to here as “AVL”) and that it enables the lawyer to clearly observe the deponent and the document.

• If the deponent is unknown to the lawyer (either as a client or personally) then the lawyer would be prudent to require the production of reliable photographic identification capable of being inspected by AVL.

• The lawyer will have to be acquainted with the document being attested, to a greater extent than would be the case if the deponent was present with the lawyer. That is because it will be necessary to provide an accurate description of the document in the certificate, to ensure the certificate is linked with the document being offered by the deponent to the court or other authority.

• Assuming the availability of a satisfactory AVL facility, the lawyer will need to see each of the pages being signed or initialled by the deponent, including the jurat page, as they are being signed or initialled, and any exhibits. The document should then be scanned and sent to the lawyer.

• The lawyer must be satisfied, as far as possible, that the document received from the deponent is the same document the lawyer witnessed being signed by the deponent. If the lawyer is satisfied about that then the document should be attested and returned to the deponent with a completed certificate.

Steve Keall
27 March 2020
FortyEight Shortland Barristers

Covid-19: business interruption insurance

Here is a chat with fellow civil barrister Rob Latton about business interruption insurance in the context of the Covid-19 pandemic .

Court costs calculator

Recently I have been involved in the development of a Court costs calculator for the High Court and District Court in New Zealand, for civil cases. It produces a free online report. You can pay to download that report. Less than the cost of a chocolate bar.

Check this out:

https://two-bees.legal

Two Bees—Court costs calculator for High Court costs and District Court costs; for civil proceedings.