Carter Chris: Property Law Bill — Second Reading 
Text is incorporated into the Bound Volume 
Carter Chris: Property Law Bill — Second Reading 
[Sitting date: 11 September 2007. Volume:642;Page:11763. Text is incorporated into the Bound Volume.] 
Hon CHRIS CARTER (Minister of Conservation)  
on behalf of the Associate Minister of Justice 
: 
 I move  
That the Property Law Bill be now read a second time 
. The Property Law Bill is significant legislation that rewrites in modern language the existing general rules for real and personal property. These rules underpin the property dealings of New Zealanders and the bill will make them easier to understand. The bill partly codifies some common law principles relating to mortgages leases and agreements for sale and purchase. The bill also makes a number of quite important changes to the law. 
The Law Commission recommended new property law legislation in its 1994 report after completing a major review. The bill is based on that report and also contains provisions to reflect subsequent case or statutory developments since the report was written. 
I would like to thank the Justice and Electoral Committee for its hard work on this rather large bill which contains many complex technical and—some might say—dry rules. These can be difficult rules to understand and the committee’s work on this bill will help to clarify them. I endorse the committee’s recommended amendments which are consistent with the purpose of the bill to modernise and simplify the current legislation to better meet people’s needs. Its amendments will improve the bill and the application of the rules in practice. 
The bill contains 365 clauses and seven schedules and the committee’s recommended changes will affect approximately 45 clauses. Many of these changes are of a technical nature and are intended to clarify the rules and make them consistent with other provisions. Some amendments however are more substantive. 
Some of the amendments are concerned with the provisions in the bill that apply to commercial leases. The bill re-enacts the current law that lessors cannot unreasonably close their consent to a request from the lessee to transfer assign or sublease the premises to someone else. The bill extends this protection to allow requests from lessees who want to change how the premises are used from what was agreed to at the start of the lease. For example a lessee might need to make this sort of request where a particular business use is no longer viable in that location. 
The Justice and Electoral Committee gave considerable thought to the provision in the bill that would have prevented lessors from including in a lease an absolute prohibition on changing the use of the leased premises from that permitted at the start of the lease. The committee recommended allowing lessors to include such an absolute prohibition. However if lessors do not do this and do not allow a change of use subject to their approval then they cannot withhold their consent unreasonably. The committee considered that this provision would strike the right balance between the interests of both lessors and lessees. 
Cabinet has recommended some changes so that when lessees ask lessors for their permission to do certain things lessors must decide on the matter without delay. Also the committee has recommended clarifying that lessors will be able to claim their legal costs and expenses relating to requests for transfers assignments subleases or changes of use only if the lease allows it. 
There is also a significant reform in the bill that will release lessees from liability for damage to leased premises where damage results from events such as fire or flood or from any danger for which the lessors are insured. Lessees will not however be exonerated where they have intentionally caused the damage or have caused the insurance moneys to be irrevocable. The committee has recommended adding to these provisions to ensure that lessees who cause damage through committing a serious criminal offence are not released from liability. For example anyone who is manufacturing P in leased premises will be liable for the damage if his or her activities cause an explosion and a fire. Further a new provision will provide that lessors can end a lease if a lessee’s negligence affects the insurance cover and they can recover any additional insurance costs from the lessee. 
The committee has also recommended a useful addition to the bill to clarify the rights of people who share the ownership of a piece of land that provides access to their respective properties. This is quite common and people can have disputes over who is responsible for repair and maintenance costs. The committee has recommended new provisions to address these problems. 
The powers of the court are extended to include a power to make an order for compensation when modifying or extinguishing an easement or covenant. An example might be where an owner wants to redevelop land by building several houses on it but the owner is prevented from doing this by a covenant in the original transfer of the land that restricts further building on the site. Although the owner could apply to the court to modify or extinguish the covenant other people who benefit from the covenant may have their property rights adversely affected. Compensation may be appropriate in such circumstances. The committee also recommended that the court be able to vary orders requiring the completion of work such as the removal or trimming of trees where circumstances change and the order is no longer appropriate. 
The mortgage provisions that make up the largest part of the bill are significant. It is important that their interface with the Personal Property Securities Act of 1999 is clear as there is a potential overlap relating to the enforcement of a mortgage over goods. The committee has recommended a new provision that confirms that in the event of an inconsistency the Personal Property Securities Act 1999 will prevail. 
The committee has also usefully recommended extending the application of the provision about the discharge of mortgages when mortgagees cannot be found to mortgages under other statutory regimes that do not have equivalent provisions—for example the Radiocommunications Act of 1989 the Fisheries Act of 1996 and the Life Insurance Act of 1908. This means for instance that when a mortgagee or lender is outside New Zealand cannot be found or is dead or it is uncertain who is entitled to receive the mortgage repayment moneys then the mortgagor or borrower can apply to the court for a discharge of the mortgage. 
Finally I note that the Government expects to introduce a Supplementary Order Paper that makes some further small technical clarifying amendments to the bill. 
I thank the Justice and Electoral Committee again for its careful and thorough work on this sizable bill. I am confident that the committee’s recommendations which are entirely consistent with the overall policy of the bill will usefully promote clarity in the law and enhance certainty in property dealings. I commend this bill to the House.