News and Events

Covid-Safe at Alert Level 3

We are committed to being Covid-Safe at Level 3, and our staff will still be working remotely where possible.

At Level 3, MBIE requires that client meetings still need to be by telephone or AV/video call (the list of exceptions to this rule is very small and unlikely to apply to us). The good news is we have been having plenty of  video call meetings over lockdown and our systems are working well!

Property settlements are all happening through Level 3 and we have clients moving house again.

Also, if you have been a client for more than 12 months we can complete refinances for you in Level 3, so please get in touch with us, or get your banker or broker to get in touch with us, this is no problem at all.

Our premises are all cleaned and ready for Level 2  and we have our health and safety plan in place, so we’ll look forward to seeing you all again soon in “real life”.

Until then, keep safe and we hope you are all keeping well out there, enjoying this beautiful Autumn weather.

The team at Corban Revell

Legal Insights

Post lockdown and Migrant workers

Post lockdown: Impact on migrant workers

Most employers and migrant workers are aware that all Immigration New Zealand (INZ) offices, onshore and offshore offices included, are currently closed due to the COVID-19 pandemic and the current lockdowns happening around the world.

Some INZ staff are working out of the INZ head office in Wellington and some are working remotely. As a result, visa processing capacity is currently limited and will remain limited even when New Zealand moves into Alert Level 3 on Tuesday, 28 April 2020. This is understandable given that INZ does not have capability to deliver their essential services remotely even under Alert Level 3

To date, INZ has focused their processing resources on COVID-19 related applications but they are now in a position to start processing some visa categories for applicants who are already in New Zealand, including:

  • Visas for victims of domestic violence
  • Partnership category temporary visas (including reassessments)
  • Full fee paying international student visas
  • Post study work visas

INZ advised the assessments of these applications or requests may take longer than usual.  Applications will generally be assessed in date order and will be allocated to an Immigration Officer as soon as possible.

Applicants will only be contacted if further information is required or once a decision is made on their application. If additional information is required, no deadline will be set to provide this information as INZ appreciates it may be difficult to obtain documentation in current circumstances.

INZ advised that while they will focus on the above visa applications, immigration officers will retain the discretion to prioritise other applications where the circumstances of the application require particular urgency. INZ did not provide any guidelines on when immigration officers could use their discretion. We believe that this type of decision will only apply to exceptional cases.

There is an indication that INZ may review these priorities. We expect that they will be able to process more visa types as soon as we move in at Alert Level 2 or below. We however, do not expect that all processing timeframes will return to normal due to the fact that hundreds of temporary visa applications are normally processed in overseas INZ offices. As we know, other countries are also in lockdown and may not have capacity to work remotely.

Further comments

As we move to Alert Level 3 on Tuesday, 28 April, we expect the flow of immigrants into the country will continue to slow down. Applying and renewing temporary work visas will be challenging.

As the pool of unemployed skilled labour increases (even after the lockdown), employers will have difficulty securing work visas for a worker unless they are able to prove that there is no other New Zealander who is available to perform the job.

Many migrant workers who are currently stranded overseas will also find themselves unable to return to New Zealand following the announcement from the Immigration Minister in regards to maintaining the current border restrictions for a prolonged period as the country recovers from the COVID-19 crisis.

We expect to see more amendments on NZ immigration policy which might assist the majority of the migrant workers who are already in the New Zealand. There are many sectors that rely on migrants for labour and skills, and amending the current policy to accommodate all the sectors’ needs could be a possible solution.

INZ policies are constantly evolving during this COVID-19 crisis. Our advice, therefore is to keep an eye out for future policy announcements from the government. Also, if you require any specific immigration advice that may affect you or your future application, please get in touch with O’neal Mendoza or one of our lawyers to assist you.

The advice above is current at the time of writing, 24 April 2020. This article is published for general information purposes only. Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice

Contact:

O’neal Mendoza

DDI: 09 837 5745

Email: omendoza@corbanrevell.co.nz

Legal Insights

Covid-19 and Insolvency

Given the Covid-19 lockdown it is, unfortunately likely several businesses will be considering insolvency.  Insolvency has a number of legal implications.

As a result, the Government is considering making changes to insolvency and company law.

These include:

  • A ‘Safe Harbour’ for Directors from some of their duties
  • Placing business debts in Hibernation until the start of normal trading

SAFE HARBOUR

The Companies Act places several obligations on Directors.  One of these duties is the decision to keep trading when a company is facing insolvency.

The Government is proposing that a decision to keep trading will not result in a breach of this duty if:

  • In the good faith opinion of the Directors, the company is facing significant liquidity problems as a result of Covid on them or their creditors
  • The company was able to pay its debts as they fell due on 31 December 2019
  • The Directors consider in good faith that it is more likely than not that the company will be able to pay it debts as they fall due within 18 months

DEBT HIBERNATION

The implications of Covid-19 will make it more difficult than normal for a company to pay its debts.  However, as is perhaps obvious, there would be significant implications for all, if companies simply stop paying their debts.

Given this the Government is proposing Debt Hibernation.  The key features are:

  • A threshold (details yet to be provided)
  • 50% of Creditors (by number and value) agree
  • A one month moratorium on debts from notification (of the proposal), with a further 6 months if the proposal is agreed

Voidable Preference

One important principle of liquidation/insolvency law is that all creditors should be treated evenly. This equal treatment is to ensure that creditors do not spend all their time monitoring the financial position of their debtors. Equal treatment requires that in certain circumstances where one creditor is better off than another creditor, the better off or preferred creditor should return some of his bounty to the liquidator.

Part of the Governments Hibernation proposal is to reduce the circumstances where a creditor will be required to return this bounty to a liquidator.

CAN I HELP?

The Official Assignee is often appointed by the Court to liquidate companies. I worked for the Official Assignee’s office between 1996 to 1999 and have practiced as a lawyer for over 22 years.

This experience enables me to very quickly guide you through insolvency issues including those referred to above.

Call me if you have any questions or require further details.

Mobile:  021 944 001

Email: corton@corbanrevell.co.nz

News and Events

Uniting Against Covid-19

There are many ways New Zealanders can make a difference in the fight against Covid-19.  From staying home and maintaining social distancing to working in our supermarkets or essential medical and social services. Amongst the Corban Revell whānau we even have people using their 3D printers to create protective face shields.

One of the whānau has had their 3D printer working constantly during the lockdown producing face shields to be donated to NZ medical professionals and first responders.

3D printer covid-19

Many Kiwi Makers are participating in this effort to help protect our front line personnel in the fight against Covid-19.  For further information, to volunteer or to make a donation please follow this link to the ShieldsUp webpage

Legal Insights

Commercial Rent Break?

Can we take a break from paying our commercial rent during Covid-19 lockdown?

The impact of COVID-19 and the unprecedented lockdown have created a lot of uncertainty in business. Non-essential businesses find themselves scrambling to find ways to make ends meet. Many tenants, in particular, are finding they are unable to pay their lease rental and outgoings during the lockdown period.

Taking a break from rent payment is going to depend on what the lease says.  The commonly used Auckland District Law Society (“ADLS”) Deed of Lease precedent, provides a wide-ranging clause which covers situations such as government lockdown as grounds for some rent reduction or even suspension of rent. In particular, the No Access in Emergency clause of ADLS form provides that:

“If there is an emergency and the Tenant is unable to gain access to fully conduct the Tenant’s business from the premises… including restriction on occupation of the premises by any competent authority [which includes New Zealand Government]…then a fair proportion of the rent and outgoings shall cease to be payable commencing on the date when the Tenant became unable to gain access to the premises…”

We are of the view that this clause would apply given that a national state of emergency has been declared and most businesses are unable to access the leased premises to continue operating their business.

An apparent issue with this clause is interpreting the meaning of “fair proportion.” We consider that fair proportion would not necessarily equate to a zero payment but at least a reduction in the rent and in some cases a substantial reduction.

Of course, it is unlikely that the landlord would be bound to agree to the full amount of rent to be waived given that there is some minimal on-going use of the premises for storage of their stock or using the IT systems to facilitate working remotely. There is also the tenant’s share of the outgoings on insurance.

Many tenants then are wondering how much rent reduction they are entitled to. This will depend on the industry, size and the impact of the lockdown on profits. Bear in mind that this is also difficult for the landlords as they may also have mortgage repayment obligations and fixed outgoings to pay on the premises. It is therefore understandable that landlords may not easily agree to a reduction of rent.

Not all leases have this type of “No Access in Emergency” clause so the advice we would need to give you potentially could vary from tenancy to tenancy, so it is important that tenants check and read the fine print of their particular lease to get the right advice for their own circumstances.

If such a clause is present, we recommend that the tenants engage to a discussion early with their landlords. In some cases, it is better to not invoke the “No Access in Emergency” clause at the first instance but an open, honest conversation with the landlord might actually provide a better arrangement.

Other alternatives: Force majeure and the doctrine of frustration

In some other rare instances, tenants may have the right to terminate the lease using the doctrine of frustration or a ‘force majeure’ clause.

Frustration can bring a contract to an end when performance of the contract is rendered impossible by an unforeseen event,  and thus outside the control and contemplation of both parties. Frustration effectively makes the parties absolved of their obligations under the lease. Tenants, however, have to bear in mind that using the doctrine of frustration as a ground for terminating the agreement is assessed at a very high threshold by the Court.

The Supreme Court is unwilling to terminate a contract using Frustration when the main objective of the contract,  based on its terms,  can still be accomplished. The doctrine of frustration is a particularly complex area of law. We recommend that a tenant seeks to obtain legal advice before attempting to rely on this doctrine. It will depend on the lease,  the nature of the business and circumstances of each case.

For example, a temporary change such as a short-term closure of premises would ordinarily not amount to frustration, even if premises are closed for an extended period of time. At the time of writing, the country has been in lockdown for a week, it is unlikely that the tenant has a reasonable certainty that they will be unable to access the premises for a longer period. (It is also worth noting that the ADLS standard lease normally provides a 9 month no access period, so terminating the lease at this stage is unlikely to be a viable option.)

Given the complexity of the doctrine of frustration, tenants may invoke a ‘force majeure’ clause if it’s included in the contract. Force Majeure is a clause designed to release a party from fulfilment of its contractual obligations as a result of uncontrollable events. This type of relief could be used as an alternative to the doctrine of frustration.

It is arguable that a pandemic amounts to a force majeure but relying on a ‘force majeure’ clause will depend on the wording of the contract. In some contracts, it can provide for cancellation of the lease and others may suspend the lease during the uncontrollable event. Essentially, the use of ‘force majeure’ clause depends on the specific wording of the contract.

If you are a tenant and in a situation where you do not know what your rights and obligations are, particularly in these uncertain times, our commercial team is able to review your lease and advise you accordingly.

We highly recommend that you do not withhold any rent payment without advising the landlord of your intention, otherwise the landlord is entitled to charge penalty interest for the rent in arrears.

Contacts:

This article is published for general information, interest and discussion purposes only. Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice.