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 23 December 2021, the Ministry of Health and Minister of Health were granted resource consent under the COVID-19 Recovery (Fast-track Consenting) Act 2020 for the enabling works required for the new Dunedin Hospital project.
The enabling works comprise excavation and removal of existing building slabs, earthworks and dewatering, and piling required for the foundations of the hospital buildings. These works will be underway shortly, with the first piles due to be installed by mid-May. The $1.4 billion new Dunedin Hospital will support the SDHB’s continued provision of high quality health services throughout the lower South Island, and will be a key urban landmark for Dunedin, testament to the city’s long-standing role in health provision and health education.
Lauren Semple, Rachel Murdoch and William Hulme-Moir have been advising the Ministry on all consenting matters relating to the new Dunedin Hospital including applying for and obtaining Ministerial approval to utilise the COVID-19 Recovery (Fast-track Consenting) Act 2020. The new Dunedin Hospital is one of two recent projects that the team have successfully consented via this fast track route. Subsequent stages of the Dunedin hospital project will consent the above ground works for the new Inpatient, Outpatient and Logistics buildings.
The obtaining of resource consent has progressed in parallel with the acquisition of property rights for the development. Julian Smith led our team advising the Ministry on those property rights.
Transpower has recently completed its project to duplex the conductors on the 142 kilometre long southern section of the Roxburgh to Islington A 220 kV transmission line which, along with related work, has substantially increased the northward capacity of this part of the transmission network.
The upgrade, undertaken through difficult terrain and in challenging weather conditions, provides transmission capacity for the possible closure of the Tiwai Point aluminium smelter or for new renewable generation in the area.
Greenwood Roche again assisted Transpower with landowner negotiations along the route of the line, including preparing the agreements, negotiating terms with landowner representatives and completing easement documentation.
Transpower New Zealand Limited recently commissioned the new 220 kV substation at Paraparaumu, providing additional electricity capacity to the Kapiti Coast.
Greenwood Roche advised Transpower on the property rights required for the new 220kV transmission lines to connect the substation to the existing electricity grid, and on the removal of the existing 110kV lines running from Paraparaumu along the proposed route of the Transmission Gully Motorway.
The national electricity grid is owned by the State-owned enterprise, Transpower New Zealand, with lower voltage distribution lines owned by a range of locally and publicly owned entities.
Greenwood Roche advises Transpower on all property aspects relating to the national grid including the new 400kV-capable transmission line between Whakamaru, in south Waikato, and Auckland.
Transpower is currently constructing the new 220kV transmission line connecting Wairakei and Whakamaru, assisting with the development of renewable electricity generation around Taupo.
Greenwood Roche has acted for Transpower on the acquisition of property rights for this project. Our work has included the acquisition of easements, Maori land issues, advice on compulsory acquisition rights, emissions trading issues and compensation entitlements.
Top Energy Limited supplies electricity to the Far North region and is improving its infrastructure network to increase capacity, security and reliability.
Greenwood Roche is advising Top Energy Limited on several new electricity transmission line projects,in particular the new 110kV lines from Kaikohe to Wiroa and from Wiroa to Kaitaia. Our work includes strategic advice, acquisition of land property rights, Maori land issues, compulsory acquisition, compensation entitlements and forestry issues.
We have recently advised solarZero on its negotiations with the Ministry of Education on the template energy services agreement that solarZero will offer to eligible state schools across New Zealand.
Have you memories of a long school building surrounded by sun-baked asphalt and playing fields, quite possibly with not a shade tree in sight? Our client solarZero has launched a new project to generate solar electricity off school roofs across the country.
With financing made available by New Zealand Green Investment Finance, the solarZero Schools initiative enables solarZero to deploy distributed solar generation across schools, demonstrating to future generations in a tangible way what a low carbon world can look like.
The 20 year contract we have helped solarZero develop provides solar energy services to the school for no up-front cost and with long‑term fixed costs at a price below the current cost of retail electricity, making it an attractive option for schools. Across the school sector there is scope for up to 200MW of solar power over time which is a significant contribution to current renewable energy targets.
The long-term contract contains some novel features, being required to operate within the regulatory framework for New Zealand state schools and meet the requirements of the Ministry as school property owner.
In 2020 and 2021 Greenwood Roche has advised on the acquisition by overseas investors of two separate hotel businesses, advising on sale and purchase terms for the land and business and application of the overseas investment rules, conducting due diligence, drafting and advising on management contracts, advising on liquor licensing, advising on transitional hand-over arrangements and generally arranging for completion of the transactions to occur with minimal disruption to the business.
Our work here builds on significant experience across different team members’ work on previous hotel transactions, including large international hotel chains throughout New Zealand.
Greenwood Roche assisted Hāpai Commercial Property Limited Partnership with the establishment of its partnership with Ngāi Tai ki Tāmaki Trust and the new entity’s acquisition of the 13 hectares of land under Macleans College in Bucklands Beach, Auckland in what has been reported as the largest Treaty-based school transfer.
Our work included advising on and implementing the joint venture structure, undertaking due diligence on the property, assisting with the financing of the transaction and settling the acquisition.
The acquisition was part of Ngāi Tai ki Tāmaki’s Deed of Settlement with the Crown, which was finalised in 2018, and included the leaseback of the land to the Ministry of Education.
Ngāi Tahu and the Accident Compensation Corporation have announced the development of a new office complex in Dunedin.
Greenwood Roche lawyers Bob Roche and Sam Green recently assisted ACC with the development of a new office building in Dunedin through a 50/50 partnership with Ngāi Tahu.
The Dunedin hub is essential for ACC’s national operations and this purpose-built four-storey complex will house 650 staff who are currently spread across four separate buildings.
Construction of this modern and environmentally friendly building is set to start this year. The 8,000 square metre building will be located on Dowling Street.
At over 20,000m2 of space, the redevelopment of a landmark Wellington building has provided the New Zealand Government’s largest Ministry with a substantial new National Office.
Greenwood Roche has successfully assisted the Ministry for Business, Innovation and Employment in the redevelopment and lease of MBIE’s new National Office premises in Wellington.
Greenwood Roche has continued to provide advice to MBIE throughout the course of the redevelopment, including assisting with the sale of the building to an NZX-listed property investment company during the project.
MBIE’s new National Office is one of a number of substantial redevelopment projects within Wellington on which Greenwood Roche has acted.
Greenwood Roche represented Transpower New Zealand Limited in relation to the redevelopment and lease of Transpower’s future national head office at Boulcott Street, Wellington.
Transpower plans, builds, maintains and operates New Zealand’s high voltage electricity transmission network. The new premises will house around 500 staff and the 24/7 control room for the National Grid. At approximately 8,400m2, the Boulcott Street transaction is one of the largest commercial office leasing deals in New Zealand this year.
The Greenwood Roche team included partner John Greenwood and principal Doran Wyatt, both based in the firm’s Wellington office.
Greenwood Roche represented the Ministry of Education on the redevelopment and 15 year lease of the Ministry’s new national head office at 33 Bowen Street, Wellington.
At approximately 13,100m2, the Bowen Street transaction was a full building lease and one of the largest commercial office leasing deals in New Zealand for the year. Greenwood Roche assisted the Ministry on all aspects of the negotiation and documents for the transaction, which included substantial refurbishment works, a seismic upgrade for the building and an integrated fitout.
The Greenwood Roche team for the deal were partner Jeannie Warnock and principal Doran Wyatt, both based in Wellington.
Kiwi Income Property Trust, one of the country’s largest listed property investors, is undertaking a $67 million redevelopment of its property at 56 The Terrace, Wellington, for lease by the Ministry of Social Development.
We are advising Kiwi Income Property Trust on this project. Our work has included advising on the development agreement and the 18 year deed of lease with the Crown and preparing and advising on the construction contract for the development works.
New Zealand Post has recently commenced operations at its new Manawatu Co-located Processing Facility.
Comprising over 7,000 square metres including a mail processing warehouse, staging interchange areas, and associated office accommodation (and a combined investment of over $10 million), the facility houses NZ Post’s mail processing functions for the entire lower North Island.
The facility is situated in the heart of Palmerston North’s main industrial area, and is strategically convenient to all major transport systems in the city (including the airport, state highways and rail network).
Greenwood Roche assisted NZ Post on the development, construction and leasing aspects of the facility. The development agreement provided for delivery of tenant works as a variation to the landlord's main contract and early engagement of the Main Contractor on a fixed margin open book basis. Both features enabled the project to be completed seamlessly to a tight schedule while maintaining the appropriate distribution of risk and responsibility between the parties.
Watercare Services Limited is responsible for providing water and wastewater services to the greater Auckland region, and employs a large number of people across many different teams.
We acted for Watercare in relation to its new head office premises located in Newmarket, Auckland. This was a significant project, involving the negotiation of a comprehensive redevelopment agreement and subsequent deed of lease, and further extensive advice in relation to Watercare’s ability to terminate its existing tenancies at that time.
As part of New Zealand Post’s strategy to release capital from its corporate properties, it sold the landmark New Zealand Post House in Wellington to listed commercial property company Argosy Property in 2013.
We acted for New Zealand Post on the sale and leaseback of New Zealand Post House and on the negotiation of a comprehensive development agreement committing the purchaser to undertake a $40 million extensive redevelopment of the building.
The sale, for $60 million, was one of the single largest commercial real estate deals completed in Wellington in 2013.
Tainui Group Holdings and the Accident Compensation Corporation have announced the development of a $50m-plus Hamilton office complex.
Greenwood Roche lawyers Bob Roche, Sam Green and Jane McDiarmid are assisting ACC with a significant office consolidation project, which has recently reached a milestone with the conclusion of a development agreement for a new office building in Hamilton.
At each of ACC's main hubs, Dunedin and Hamilton, we are advising ACC on the RFP process for new office accommodation, development agreements for the design and build of new office buildings and the deeds of lease. Each building will have office space of approximately 8,500 square metres and will be significant construction projects for these cities.
The new Hamilton building will be developed by Waikato-Tainui and will be located on the corner of Collingwood Street and Tristram Street. The building is designed as a state of the art, low-rise, three-pavilion building and will be a substantial boost for the Hamilton CBD.
Construction Verdict highlights some of the most important legal developments during the last few months relating to the building and construction sectors.
Construction supply chain woes continue, EBOSS reports
The demand for construction materials has escalated drastically over the last 12 months and forecasts from EBOSS suggest that it will only continue to rise until Q3 2022 at the very least. Couple this with a constrained supply chain as a flow-on effect from the pandemic and you have the recipe for continual increases to prices and lead times of construction materials.
Starting with the supply issue, the problem largely stems from the New Zealand industry’s reliance on freight. The report found that 90% of all construction product sold in New Zealand is either imported or contains imported components. This dependence on imports was never an issue until the market experienced rapid change over the last year. New Zealand is currently experiencing a significant increase in its construction workload (which include the measures taken to address the housing crisis). Globally, other countries are having the same idea. The United States is experiencing a 15-year housing boom, and both China and India are anticipating construction demand to grow at least 12%. New Zealand is struggling to get access to both materials and freight in the face of this. In fact, EBOSS’ survey found that four out of five domestic suppliers are experiencing issues relating to either:
The COVID-19 Response (Management Measures) Legislation Act 2021 became effective on 3 November 2021. In this article we focus on the amendments to the Property Law Act 2007 (PLA) made by that Act. These amendments may result in significant alterations to contractual bargains struck between landlords and tenants, particularly in relation to rent abatement during periods when epidemic related premises access restrictions are in force.
Key changes to the PLAWhilst the Epidemic Preparedness (COVID-19) Notice 2020 (Epidemic Notice) is in force, a “no access in an emergency” clause will apply to leases and licences that do not include a similar clause that covers an epidemic.
The inclusion of fitness for purpose warranties in construction contracts and consultancy agreements is frequently the subject of fierce debate between principals, contractors and consultants. This article considers circumstances where a fitness for purpose warranty may be implied at common law into certain contracts, thereby rendering such debate futile.
We specifically focus on construction contracts but our comments apply equally to a range of professional services contracts in which fitness for purpose is often sought to be implied.
What is a “fitness for purpose” warranty?
A fitness for purpose warranty is a contractual or implied warranty given by a contractor, consultant or supplier to deliver a product (or a building or service) that is capable of being used in the way that the principal intends to use it. The warranty is included as the principal is reliant on the contractor’s particular skill and expertise to design, build and/or supply a product or service that will perform as required.
A contractor/consultant has a separate duty at common law to exercise a duty of care in accordance with professional standards, and may be liable for breach if it is proven not to have met that level of care (subject to relevant common law tests). In comparison, breach of a fitness for purpose warranty only requires evidence that the product (or building) does not meet a certain standard that the principal has made clear is required (or sometimes which can reasonably be inferred from the principal’s requirements). This lower threshold makes fitness for purpose warranties far more onerous for the contractor and very often will have adverse insurance repercussions.
A fitness for purpose warranty may be:
New Zealand’s COVID-19 alert level restrictions have placed under scrutiny "no access in emergency" provisions in leases. These provisions generally require an abatement of rent and outgoings when a tenant is unable to fully access the leased premises to carry out its business due to an emergency. In most cases, these clauses will apply during Covid-related lockdowns. In this article we examine recent case law on their interaction with the statutory right to cancel for breach.
Under sections 245 and 246 of the Property Law Act 2007, a landlord can cancel a lease after serving notice on a tenant for non-payment of the rent or a breach of other obligations under a lease (such as the obligation to pay outgoings). The recent High Court case of SHK Trustee Company Limited v NZDMG Limited serves as a warning to landlords who intend to cancel a lease for non-payment of rent and outgoings during an emergency.
The landlord leased an office and a warehouse space to a kitchen manufacturer under two separate leases. The leases were on the widely-used Auckland District Law Society (ADLS) deed of lease, which includes a “no access in emergency” provision at clause 27.5. The tenant ceased rental payments from the first day of the first alert level 4 lockdown on 26 March 2020 and claimed a rent abatement under the “no access” clauses in the leases.
In August 2020, the landowner served a notice on the tenant informing the tenant that it was in default of its obligation to pay the rent and outgoings and requiring that the outstanding sums be paid within 30 working days. The notice made no allowance for the required abatement of rent and outgoings due to the “no access in emergency” clauses. After the tenant did not comply with the notice, the landlord cancelled the leases, took possession of the premises and later commenced summary judgment proceedings to recover the rent arrears.
The High Court declined the landlord’s application in respect of the amounts claimed as the landlord had failed to provide for an abatement of the rent in light of the ongoing pandemic.
As this was a summary judgment application for unpaid rent, the Court was not able to assess what the “fair proportion” abatement should have been (as this is “an evaluative exercise that cannot be done on a summary judgment application”) or determine whether the landlord’s breach notice was invalid. If the breach notice was invalid, the cancellation of the leases would have been unlawful. The Court stated that it was arguable that the breach notice was invalid on the basis that it did not make an allowance for the required abatement of rent and outgoings under clause 27.5 of the leases. The Court recommended that the landlord ought to have obtained an authoritative determination of the rent payable by suing the tenant and obtaining a formal judgment of the unpaid rent, or to have only served the breach notice for the undisputed rent arrears.
The case is an illustration of the risks involved in serving breach notices. Where claimed rent arrears relate to a period during which the rent abates under the terms of the lease or due to a statutory entitlement, landlords must draft breach notices with caution. Landlords might choose to rely on outstanding rent or outgoings payable in respect of non-abatement periods, agree the abated “fair proportion” with tenants or obtain judgment through legal proceedings as to the amount owing under the lease during the abatement period. Landlords also need to consider statutory interventions due to the COVID-19 pandemic (such as the COVID-19 Response (Management Measures) Legislation Bill) – relying on the words of the deed of lease alone may not be sufficient.
The New Zealand Government has introduced the COVID-19 Response (Management Measures) Legislation Bill (Covid Bill), which passed its first reading on 29 September 2021 before going to the Finance and Expenditure Select Committee. Submissions to the Committee are due by 5 October 2021, with the Committee to report to the House on 14 October 2021.
The Covid Bill amends several pieces of legislation. In this note, we focus only on the proposed amendments to the Property Law Act 2007 (PLA).
This is the second attempt at implying rent abatement provisions into commercial leases since Minister Little’s proposals in 2020, which did not make it beyond a Cabinet paper.
The Bill has received criticism both within and outside of Parliament for cutting across existing commercial leasing contracts, and the press release by the Government announcing the Covid Bill did not indicate the extent to which a lack of rent abatements is a problem in commercial leases.
The Property Council and a number of significant figures in the property industry have come out in opposition, noting the issues around defining the quantum of a rent abatement. Interestingly, the Property Council is seeking to gather information from its members about abatements or deferrals already agreed. The results may be a useful indicator as to whether there is a widespread problem necessitating Government intervention, or otherwise.
Key proposed changes to the PLA
From 28 September 2021 a “no access in an emergency clause” (implied clause) is implied into leases that do not include such a clause that covers an epidemic: Unamended ADLS leases from 2012 onwards already contain a similar clause and will not be affected by the proposed legislation, but other forms of leases such as Property Council leases and bespoke leases will need to be considered on a case by case basis.
The implied clause is triggered when a tenant “is unable to gain access to all or any part of the leased premises to conduct fully their operations from all or any part of the leased premises, because of reasons of health or safety related to the epidemic”: What “fully” conduct means is to be determined and may cover situations where the tenant is operating in the premises sub-optimally, such as restrictions to capacity, customer access or social distancing requirements.
The implied clause provides that a fair proportion of rent and outgoings will abate under the lease during the period of the tenant’s inability to access all or part of the leased premises, backdated to 28 September 2021 (but possibly earlier), and ending when the inability ceases: A “fair proportion” is not defined and nor is there any guidance on this. Much will depend on the circumstances, and negotiated outcomes will vary depending on the nature of the tenant’s business, the premises and the terms of the lease. The provisions around when the abatement commences are unclear. We expect these will be further developed in Select Committee.
The implied clause will not apply where the parties have already agreed contractually to vary the rent payable if access to the premises is restricted because of an epidemic (a “pre-commencement rent variation agreement”) and the agreement applies to the period covered by the implied clause: The implied clause might therefore apply for some of the period not covered by the pre-commencement rent variation agreement.
Until the landlord and tenant determine what a fair proportion is, a landlord cannot terminate a tenant’s lease for non-payment of rent and outgoings: Section 246 of the PLA has not been amended so, a landlord may still cancel a lease for breach of other covenants of the lease.
Any dispute about what is a “fair proportion” is to be referred to arbitration under the Arbitration Act 1996. Arbitration could be expensive and lengthy: This does not preclude the parties from agreeing other methods of dispute resolution.
This rent abatement is specific to the COVID-19 epidemic: It is expressly repealed when the Epidemic Preparedness (COVID-19) Notice 2020 expires or is revoked.
The implied covenant may be negatived, varied or extended by express agreement after 28 September 2021: Relying on clauses in existing leases which exclude implied terms in the PLA will not be sufficient to exclude this implied covenant.
What can a landlord or tenant do?
Until the Covid Bill achieves Royal assent, landlords are not legally obliged to offer a rent or outgoings abatement where they do not have clause 27.5 of the ADLS lease (or a similar clause) in their leases. This is obviously a hard-nosed approach to be taken by landlords, but not an illegal one. Though the Covid Bill is only proposed legislation, tenants have been given a certain level of bargaining power to start discussions to achieve a rent and outgoings abatement and landlords can expect to see an increase in requests of this nature. Similar requests occurred shortly after Minister Little’s announcement in 2020.
Regardless of the passing of the Covid Bill, landlords and tenants are still free to come to agreement on a rent and outgoings abatement. Provided they agree from 28 September 2021, this will exclude the implied rent relief provisions in the Covid Bill entirely, perhaps in return for some other consideration. One particular incentive for the parties to agree an abatement is the lack of guidance over “fair proportion”. It is our experience that parties often pre-agree fixed discounts that will apply for Alert Levels 3 and 4.
We strongly recommend that landlords do not take any action to terminate leases for non-payment of rent and outgoings without seeking advice first. Particular caution should also be exercised as to whether a landlord calls on a bank guarantee or other security in respect of rent and outgoings, which may later be found to be properly subject to abatement from 28 September 2021. The Courts have regularly made decisions favourable to tenants, where landlords have acted aggressively in uncertain situations.
What leases are intended to be caught?
Leases which already contain a “no access in an emergency clause” are excluded from rent abatement provisions in the Bill.
The proposed wording of the “no access in an emergency” provision is close to, but not the same as, the wording used in clause 27.5 of the ADLS lease. However, by way of example, the equivalent clause 7.5(c) of the Property Council office lease is less clear in that:
the concept of “no access in an emergency” has slightly different triggers (such as the narrower concept of “inaccessibility”); and
there is also an additional requirement before a tenant may obtain rent relief, being that the landlord must be able to collect loss of rent insurance.
Is clause 7.5(c) of the Property Council office lease a “no access in an emergency clause” for the purposes of the Covid Bill? It is questionable and will likely be the subject of legal debate. However, the overall intention appears to be that, if there is a clause in a lease that operates akin to clause 27.5 of the ADLS lease, the implied clause proposed pursuant to the Covid Bill will not apply.
Watch this space
The Covid Bill is proceeding quickly through the Select Committee process and we can expect some strong submissions and public comments to be made before the Covid Bill is passed.
If you would like any further information about the effect of the PLA changes or how to deal with them, please contact Antonia Shanahan, Steve Woodfield, Mark Hay, Simon Mee or any of our experienced property lawyers.
Construction Verdict highlights some of the most important legal developments during the last few months relating to the building and construction sectors.
Construction Contracts (Retention Money) Amendment Bill
In early June Parliament introduced the Construction Contracts (Retention Money) Amendment Bill which, if passed, will further amend the retention regime under the Construction Contracts Act 2002 (CCA). The proposed changes address shortfalls in the current regime, such as situations where an insolvent contractor has co-mingled retention funds with its working capital, and its subcontractor is barred from recovering the full sum.
The headline changes are: