We don’t stand apart. When briefed by a client we become an embedded part of the team. We engage our depth of knowledge and commercial acumen to swiftly identify what’s required from the outset – and set about delivering it. It’s not a revelatory approach, but it is refreshing, competitive and deeply efficient – and enjoyable.It has earned us a market reputation as a leader in our areas of expertise where we have established:
A prominent position on the “All of Government” external legal services panel.
A substantial public and private sector client base.
Regular appointments to nationally significant projects.
“They operate with a level of charisma in the room – certainly not order takers. They sense the gaps then find the solutions.”
To ensure our specialists are always where they’re needed, we operate as one firm with hubs in Auckland, Wellington and Christchurch. We advise on a range of public and private sector projects.
On 16 September 2020 the Associate Minister for Greater Christchurch Regeneration approved Regenerate Christchurch’s proposal to amend the Christchurch District Plan and the Canterbury Regional Policy Statement to provide for the development and operation of commercial film and video production facilities in Christchurch.
The Minister approved the proposal developed by Regenerate Christchurch, with assistance from Greenwood Roche, and exercised powers under section 71 of the Christchurch Regeneration Act 2016 for the final time before the section was repealed.
The amendments will come into force on 13 October 2020, and result in a planning framework enabling commercial film or video production activities to locate in specific areas in Christchurch.
Demand from local and international film companies for production facilities in New Zealand is high, but there are no major production facilities in the South Island. The establishment of such facilities in Christchurch, made easier through the amendments, presents an exciting prospect for the city’s creative identity and industry and for the economic and employment opportunities that these facilities would provide.
This proposal is also significant as the last regeneration initiative performed by Regenerate Christchurch. It has been a privilege for Greenwood Roche to provide legal support to this now-disestablished organisation since 2016, and this outcome is a fitting end considering the hard work and dedication of the Regenerate team over the last four years.
The Minister’s decision can be viewed at the following link:
On 23rd December 2018 Hon Poto Williams, the Associate Minister for Greater Christchurch Regeneration approved a proposal to amend the Christchurch District Plan provisions for Hagley Oval to enable it to host large international fixtures and meet modern day broadcasting requirements.
Greenwood Roche assisted Regenerate Christchurch in developing the proposal on behalf of the Canterbury Cricket Trust.
The proposal approved by the Minister amends the Christchurch District Plan through section 71 of the Greater Christchurch Regeneration Act 2016 (GCR Act). The approved proposal incorporates the current resource consent conditions into the Plan and amends certain aspects of those conditions, including:
These changes will mean that Hagley Oval will be able to host day-night matches that are now required by top-tier teams, allowing Hagley Oval to be more competitive when bidding for games compared to its rival cricket grounds. With the Women’s Cricket World Cup approaching in 2021, the changes will allow Christchurch City to bid for and host games in this tournament.
Through the public participation stage of the process, 1,253 written comments were received, of which 83 percent were in favour of the proposal.
The Minister’s decision can be viewed at the following link: https://dpmc.govt.nz/sites/default/files/2019-12/Hagley Oval - Section 71 Proposal - Signed Decision Paper_1.pdf
Following the acquisition of all land needed for the New Dunedin Hospital, demolition of the existing buildings has commenced - starting with the former Cadbury Warehouse. The $1.4 billion hospital will be developed over the next 6 years and will occupy land on either side of St Andrews Street.
A team from Greenwood Roche is assisting the Ministry of Health on the development of the hospital. We have acted on the alterations to the Dunedin City Plan to facilitate the hospital, the development of the site masterplan, the acquisition of the required land, the payment of compensation to affected landowners and tenants, and on the consents required for the hospital.
Over the coming years, the Burwood Health Campus and Christchurch Hospital will undergo a $650 million re-development, the largest investment in public health facilities in New Zealand.
Greenwood Roche has successfully assisted the Ministry of Health in obtaining consent for the Burwood hospital redevelopment and a designation for the new Acute Services Building at Christchurch Hospital. The designation has been progressed utilising the provisions of the Canterbury Earthquake Recovery Act and has required a very thorough and careful assessment of the tests within that Act.
The hospital project is the third significant development project within Christchurch City that Greenwood Roche has successfully accelerated via the provisions of the Recovery Act.
This purpose built precinct will bring Christchurch’s justice and emergency services together on one site in central Christchurch. It is the largest multi-agency government co-location project in New Zealand’s history.
Greenwood Roche advised the Ministry of Justice regarding the resource management aspects of the Christchurch Justice and Emergency Precinct. This project is one of a number of anchor projects we are involved in.
Te Raekura Redcliffs School was opened by Prime Minister Rt Hon Jacinda Ardern on 25 June 2020 nearly 10 years’ after it was closed in response to the 2011 earthquakes.
Lauren Semple and Rachel Murdoch advised Regenerate Christchurch on the use of the Greater Christchurch Regeneration Act 2016 to facilitate the rezoning of the new school site for that purpose, and the rezoning of the former site as a reserve.
Our client, one of Auckland’s largest landholders, recently sold nine super lots of bare land to a respected developer under a long term staged disposal and development agreement. Over time, the land will become a significant new mixed-use centre.
Greenwood Roche assisted with negotiating the terms of the agreement for sale and purchase including masterplan provisions, development covenants, profit-share arrangements and further land options.
Our client retains significant landholdings in the area. It has a strong interest in a successful and quality development that it can use as a spring-board for its own development plans. To achieve this, it was willing to put together an attractive package and share in the risks and reward of the development.
The agreement was concluded in lockdown. Despite the worsening economic news, both parties remained committed to their long-term vision.
Greenwood Roche acted for the purchaser in the acquisition of Highbury Shopping Mall, Auckland. We are also assisting in the ongoing repositioning and redevelopment of the mall.
Our work included negotiating the terms of the agreement for sale and purchase, conducting an extensive due diligence investigation on all legal aspects of the property, instructing technical consultants and advising on various commercial property and business structuring matters.
We continue to assist with the new owner’s expansion and redevelopment plans at the mall, including construction, new leasing and strategic land acquisitions.
Greenwood Roche is assisting Watercare with this strategically significant project, designed to ensure there is increased capacity in Auckland’s water network to meet the ever increasing demand.
More recently, the Tunnel is being constructed within Newmarket to connect to the Khyber Pass Reservoir, and is being directionally drilled under numerous parcels of land.
Hadleigh Yonge is leading Greenwood Roche’s team which is advising Watercare on various aspects of the project, including providing strategic advice, and negotiating and acquiring property rights.
The Government has recently developed a number of initiatives, including the Urban Development Act 2020 (UDA), the National Policy Statement on Urban Development (NPS-UD) and the COVID-19 Recovery (Fast-track Consenting) Act 2020, designed to support the functioning of urban environments and eliminate barriers to their creation throughout New Zealand.
As part of this package of initiatives, the Infrastructure Funding and Financing Act 2020 (“Act”) passed its final reading on 22 July 2020 and received royal assent on 6 August 2020. The Act looks to ensure that a lack of funding at local government level does not continue to constrain development. Using the Act, developers can now access a new funding structure that will allow them to raise the funds and finance necessary for large-scale projects themselves (rather than rely on local government), with repayments made by future owners through rates on the developed land.
As noted by Auckland Mayor Phil Goff, “Traditional approaches to infrastructure funding and financing are not working. Constraints on council debt levels means viable infrastructure projects are postponed for years, despite the pressing need for more housing in these high-growth areas.”
The new funding model provides an alternative funding mechanism in a bid to accelerate the development of housing in particular. The Act received cross party support and is designed to complement existing funding tools available to local government.
The financing structure set out in the Act is modelled on the structure utilised in the Milldale development in North Auckland. For Milldale, a special purpose vehicle (SPV) was set up to oversee a residential development project. The SPV raised initial capital from investors, proposing to pay them back by an annual ‘infrastructure payment’ added to the rates bill. Payments will initially be made by the developer and, in time, by the section owners.
The infrastructure payment obligations are secured by an encumbrance on each title, meaning the obligation to meet the payment runs with the land and binds any subsequent owners. In the Milldale example the payments are $650 + 2.5% interest per annum for apartments and $1000 + 2.5% interest per annum for homes and will last for 30 years.
While the Milldale development is still in the construction phase it is already clear that the model has enabled acceleration of the project and therefore faster delivery of affordable housing in Auckland.
How will The Act Work?
The Act adopts a very similar model to the Milldale model, by allowing the use of multi-year levies in large scale development that place the cost of infrastructure on those who will benefit directly from it. Levies will be able to be proposed for the provision or improvement of the following:
The National Policy Statement for Freshwater Management 2020 (NPS-FM) has recently been gazetted and will come into force on 3 September 2020. The NPS-FM will replace the current National Policy Statement for Freshwater Management 2014 (amended 2017) and will make fundamental changes to the way freshwater is managed in Aotearoa.
A prominent shift in the new NPS-FM is the incorporation of Te Mana o te Wai as the primary approach to managing freshwater. Te Mana o te Wai is defined in the NPS-FM as “a concept that refers to the fundamental importance of water and recognises that protecting the health of freshwater protects the health and well-being of the wider environment. It protects the mauri of the wai. Te Mana o te Wai is about restoring and preserving the balance between the water, the wider environment and the community”. The NPS-FM identifies a hierarchy of obligations within Te Mana o te Wai that prioritises:
The Residential Tenancies Amendment Bill 2020 was passed by Parliament on 5 August 2020, and is awaiting Royal Assent. The Bill makes a number of changes to the Residential Tenancies Act 1986, which will affect all residential landlords and tenants.
Media have rightly focused on the reduced frequency of rental increases and changes to the termination of periodic tenancies, with these provisions being substantially amended for the first time in over 30 years.
Most residential property landlords will only be able to terminate a periodic tenancy:
Tenants will need to give at least 28 days’ notice to terminate a periodic tenancy – up from 21 days.
A late change was made to allow tenants to withdraw from a fixed-term or periodic tenancy on 2 days’ notice in circumstances of family violence. Any remaining tenants are then able to apply to the Tenancy Tribunal to be released from the tenancy on hardship grounds. A landlord who is physically assaulted by a tenant can terminate the tenancy by giving 14 days’ notice, but only if a charge is laid against the tenant for that assault.
Rent may not be increased within 12 months after the start date of the tenancy or 12 months after the last increase took effect. This applies even if the tenancy agreement (including for a fixed term tenancy) provides otherwise. As with the current Act, rent cannot exceed the market rent and cannot be charged more than 2 weeks in advance.
The amendments also strengthen the Residential Tenancies (Healthy Homes Standards) Regulations 2019 (which set “healthy homes standards” for heating, insulation, ventilation, draughtiness, moisture ingress and drainage) by requiring that landlords retain information about compliance with the healthy home standards and provide that information to tenants on request.
The changes largely result from a public consultation process undertaken by the Ministry of Business, Innovation and Employment in 2018, and driven by the Government’s desire to make life better for tenants in light of home ownership being at a 60 year low and the number of rented properties exceeding 600,000. The changes therefore increase the rights of tenants, and reflect that tenants will often occupy rental accommodation for many years.
We advise a range of social housing and residential property investors on the acquisition, management and disposal of properties. If you would like further advice on the changes to the Residential Tenancies Act 1986, please contact our real estate and property team.
The Urban Development Bill 2020 passed into legislation on 6 August 2020, becoming the Urban Development Act 2020 (Act).
The purpose of the Act (and the end to which its powers are to be deployed) is to facilitate urban development that contributes to sustainable, inclusive and thriving communities. The primary "beneficiary" of the Act is Kāinga Ora—Homes and Communities (Kāinga Ora), the Crown entity established in 2019 with the objective of contributing to sustainable, inclusive and thriving communities through, amongst other things, initiating, facilitating or undertaking urban development.
Powers given to Kāinga Ora
The Act provides Kāinga Ora with a "tool-kit" of statutory powers, a number of which are, in effect, modified versions of existing development powers currently available to local government. Included in this "tool-kit" are powers relating to the planning and consenting of urban development projects, land acquisition, infrastructure development powers, and funding mechanisms.
Most powers apply only to "specified development projects", but some powers also apply to any urban development project initiated, facilitated or undertaken by Kāinga Ora. For example, Kāinga Ora is empowered to acquire land for any urban development project.
"Specified development projects"
The establishment of a "specified development project" allows Kāinga Ora to access the full suite of statutory powers to facilitate complex development projects.
The process for establishing a specified development project under the Act can be initiated by either Kāinga Ora or the Ministers of Urban Development and Finance (acting jointly). In either case, Kāinga Ora must engage with; Māori entities with an interest in the project area, hapū associated with any former Māori land in the project area, and with key stakeholders including local authorities, Heritage New Zealand Pouhere Taonga and the operators of affected infrastructure. Kāinga Ora must also invite public feedback on the key features of the project.
The Ministers may accept the recommendation that the project be established as a specified development project where it meets identified criteria, including whether the project objectives are consistent with the purpose of the Act and the national directions under the Resource Management Act 1991.
Kāinga Ora must then prepare and seek public submissions on a draft development plan for the project. The submissions on the draft development plan are reviewed by an independent hearings panel, which then recommends to the Minister for Urban Development whether to approve or amend the draft development plan.
Powers relating to "specified development projects"
Once the development plan takes effect:
The Act is a key feature in the suite of Government-led initiatives designed to support the creation and delivery of well-functioning urban environments. While the tools available to Kāinga Ora under this Act are powerful, the process for accessing them provides ample opportunity for Ministerial decision-making and therefore judicial oversight. These consultative and decision-making requirements are likely to (appropriately or otherwise) limit the number of projects that will be suitable candidates for progression under the Act. However, for projects facing significant barriers, the Act can offer a comprehensive pathway to facilitate their development where they will contribute to sustainable, inclusive and thriving communities. Navigating the different stages of decision-making under the Act will require considerable skill and strategic nous.
For any questions on the Act and/or the COVID-19 Recovery (Fast-track Consenting) Act 2020, and how these alternative processes might be used or impact developments, please don’t hesitate to contact Lauren Semple, Francelle Lupis or Jeannie Warnock.
On 5 June 2020, the Supreme Court issued its decision on an appeal by 127 Hobson Street Limited (127 Hobson) against the Court of Appeal’s finding that a requirement to indemnify lessee Honeybees Preschool Limited (Honey Bees), for all financial obligations incurred under a lease as a result of 127 Hobson’s failure as lessor to install an elevator, was not an unenforceable penalty.
The issues on appeal involved an examination of the scope of the current rule against penalties in New Zealand and whether the clause in question constituted an unenforceable penalty.
Upholding the Court of Appeal finding, the Supreme Court has usefully re-stated the law on penalties in New Zealand.
Honey Bees runs a childcare centre in central city premises leased from 127 Hobson. When the Deed of Lease was entered into, the parties also entered into a separate agreement under which 127 Hobson and its director agreed to install a second lift in the building to facilitate the arrival and departure of children at the central city high rise preschool.
This agreement included a provision whereby both 127 Hobson and its director agreed that in the event this second lift was not operational by 31 July 2016, Honey Bees would be indemnified against all rent and outgoings it incurred under the lease until its expiry.
The Supreme Court looked at the circumstances around entry into the overall transaction, examining why the separate second lift agreement was central to the lease’s suitability.
What is the scope of the rule against penalties in New Zealand?
The Supreme Court summarised the rule against penalties as follows:
Was the indemnity clause an unenforceable penalty?
To answer this, the Court looked at Honey Bees’ legitimate interests and found that the only relevant interests were those that flowed from a failure to install a second lift on or before the due date. As the preschool was operating on the fifth floor of a busy high rise building, children and parents would be arriving and leaving within concentrated blocks of time. Honey Bees was looking to increase the capacity of its preschool over the forthcoming years. This was important to the commercial success of the venture.
The Court also found that there was no discrepancy in the parties’ respective bargaining powers.
The Court agreed with the Court of Appeal’s finding that, despite the ‘all or nothing’ nature of the indemnity clause, the consequences of the indemnity being triggered were not out of all proportion to the legitimate interests secured, and therefore the clause was not an unenforceable penalty.
This Court also read the wording “all obligations” as applying to only “payment obligations”, i.e. Honey Bees was indemnified against all its financial obligations under the lease but the agreement did not give Honey Bees a right to breach its own obligations under the lease.
It is worth noting that the Court confirmed the general understanding in property law that rights of renewal of leases are in fact grants of a new lease, not an extension of the existing lease. Therefore the indemnity provided under the indemnity agreement only applied to the initial term of the lease, rather than a 24 year period including all renewals.
10 July 2020
The Overseas Investment (Urgent Measures) Amendment Act 2020 (Urgent Measures Act) came into force on 16 June 2020, bringing into effect the temporary notification regime.
The manner in which the temporary notification regime applies to property transactions and how a change of control is calculated has now been clarified by the Overseas Investment Amendment Regulations 2020 (Regulations). In addition, the Overseas Investment Office (OIO) has recently published details of what information is required when making a notification to it and provided some additional guidance.
When is notification requirement triggered?
One of the key things achieved by the Regulations is to clarify when various property transactions require notification to the OIO.
The Urgent Measures Act provides in section 82(2)(b), that, an acquisition of property by an overseas person used in carrying on business in New Zealand that effectively amounts to a change in control of that business, as defined in the Regulations, is subject to the temporary notification regime. The Regulations define what is meant by a change in control of the business, and here take a novel approach. Change in control is to be assessed by reference to what proportion of the counterparty’s (i.e. the vendor’s or lessor’s) total assets are being acquired. A “change in control in relation to the acquisition of property used in carrying on a business” is where the value of the property being acquired is more than 25% of the value of all New Zealand property owned by the person from whom the property was acquired, as assessed immediately before the acquisition. If this threshold is exceeded, the transaction must be notified.
This means that both the purchase of land, as well as the entry into a lease (being an acquisition of an interest in land), will be subject to the temporary notification regime and require notification to the OIO if they involve more than 25% of the counterparty’s total assets.
The value of property is to be determined by reference to the most recent financial statements, accounting records and all other circumstances which affect the value of the property. Reliance may be placed on valuations that are reasonable in the circumstances.
Further, value is to be determined by reference to the assets of the actual counterparty, not its related companies. If a particular property asset is held in a special purpose vehicle, as is often the case, regard cannot be had to the total value of group assets.
It is quite possible that a counterparty will resist having to provide its confidential financial information. If so, one solution would be to include a warranty that the threshold is or is not met, and if need be, proceed, or not proceed, to notification accordingly. The OIO has indicated it will be providing further guidance here shortly.
One thing to watch out for in relation to the application of the notification regime to business transactions generally is that it covers any acquisition of securities by an overseas person. Strictly speaking, this would have covered even the uncontroversial incorporation of a New Zealand subsidiary of the overseas person, without any business transaction occurring. After we raised this anomaly with the OIO, it has now been clarified by the enactment of the Overseas Investment Amendment Regulations (No 2) 2020 that a mere company incorporation does not require notification to the OIO.
A few process comments
If it is determined that a transaction is subject to the temporary notification regime, notification to the OIO is to be made prior to giving effect to a transaction. A transaction may be entered into before notification, provided the transaction is conditional on receiving a direction order from the Minister. Transactions entered into before 16 June 2020 are not subject to the temporary notification regime at all.
The notification process is completed online via an online form on the OIO’s website. The information required includes:
This information must be submitted with the online form and cannot be sent separately to the OIO. No fee is payable.
Unless the OIO makes appropriate changes to its online form, the process for completing it will remain clunky. All the information needs to be gathered, and ready for upload as required, in advance. No provision has been made for the counterparty to submit its financial information privately, on a confidential basis. There is no ability to provide additional material (for example a statement that the counterparty refuses to provide financial statements, or a letter explaining any necessary departure) and there is a tick-box requirement that the party submitting confirms that all required information has been included in the notification (without which the online submission will not work).
Once a transaction has been notified, the OIO will conduct an initial review and make a recommendation to the Minister of Finance, who will decide whether the transaction is contrary to the national interest. No delegation of this decision-making power has been made, regardless of transaction value, and if all parties comply then it is possible to foresee a bottleneck arising at the ministerial level. This initial review is expected to be completed within 10 working days, although the legislation does actually provide for the initial review to take up to 40 working days, with provision for extension by the Minister for a further 30 working days.
A notified transaction cannot progress until a direction order is issued. The Minister may:
If it is found that further assessment is necessary, the transaction will be subject to a detailed review against the national interest test. This is a discretionary power, and guidance on this test notes that considerations are to be given to a range of factors and the likely impact of the investment.
The OIO expects the majority of transactions to be able to proceed without any intervention. However, as the notification requirement effectively amounts to a temporary ministerial power of veto over transactions, at the very least resulting in potentially significant delay, the new regime is of concern to business.
Thankfully the new emergency notification regime is only temporary and an assessment of the regime is to commence by the end of July to ensure that classes of transactions subject to the regime are not broader than reasonably necessary. Treasury has advised this review will be completed after the 2020 General Election. Further, the emergency notification regime will be reviewed by the Minster at 90 day intervals to ascertain whether the effects of the pandemic justify the regime remaining in place. Where it is determined, the emergency notification regime is no longer required, this will be replaced by a permanent call-in power (see our previous article here for details of this). The first 90 day review has now been completed, and on 1 September Treasury issued a statement advising that New Zealand would retain the temporary notification regime for a further 90 days. The next statutory review is due on 28 November 2020. Following the initial review the OIO confirmed it had received 102 notifications, with three being called in by the Associate Minister of Finance for further assessment. Of these three, two transactions have been allowed to proceed, and one is currently being reviewed. We will watch with interest the outcome of this assessment.
Please contact Brigid McArthur or one of our lawyers in our Property team if you would like help on interpreting the temporary notification regime and the recent changes to the Overseas Investment Act.
10 July 2020 (updated September 2020)