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Part 2—The draft Bill


Request for Submission; Introduction »
Part 1—The Revision process »
Part 2—The draft Bill
Part 3—Nature of drafting change »
Part 4 —Issues noted for possible future reform »

The exposure draft is being released for public consultation to obtain feedback on the specific drafting changes made and on whether the Bill contains any inadvertent changes to the law.

Part 3 of this document will assist in navigation between the existing statutes and the new provisions.

In some cases no change has been made.  However most of the provisions have had both structural and textual amendments made to align them with best practice in modern drafting. The language has been modernised wherever it has been considered that this can be done without risking a change to the law. Lengthy clauses have been broken up into paragraphs and subparagraphs to assist with readability.

Notes appear in the Bill itself to explain why a particular approach has been taken, or why a particular change has not been made. We seek feedback on any of the provisions in the Bill and, particularly, on those for which notes have been added.

Minor changes to legal effect

Section 31(3) of the Legislation Act 2012 states that “[a] revision Bill must not change the effect of the law, except as authorised by subsection (2)(i) or (j).”  Subsection (2)(j) is not relevant to this revision Bill, but subsection (2)(i) allows minor amendments to be made to clarify Parliament’s intent, or reconcile inconsistencies between provisions.

This Bill contains 21 clauses which PCO and MBIE consider make amendments which fall within section 31(2)(i) and (3).  They are identified with notes in the Bill.  The minor amendments feature in the following clauses, and are also described in Schedule 2 of the Bill:

9, 16, 24, 25, 26, 28, 76, 95, 123, 178, 194, 314, 318 (information technology), 327,  331, 332, 333, 339, 342, 347, and 355.

These are also identified in Part 3 of this paper. Not all of the possible minor amendments identified in Notes to the Bill have been included in Schedule 2. We will update Schedule 2 following consultation.

Question 1: Do the changes made in those provisions amount only to “minor amendments to clarify Parliament’s intent, or reconcile inconsistencies between provisions” within the meaning of section 31(2)(i)?

Question 2: If the Bill does make “minor amendments” to the effect of the law, is there any reason why the amendments should not be made?

Question 3: Are there any other “minor amendments” within the meaning of section 31(2)(i) of the Legislation Act 2012 that should be made? If so, please provide a detailed explanation of any proposed amendment and why it is justified.

Question 4: Are there any other changes that should be made to improve the Bill as a revision Bill? Proposed changes should fall within the powers contained in section 31(2) of the Legislation Act 2012, such as changes to language, format, or punctuation.

Question 5: Would accessibility and readability be aided if more legislative examples were given?

Should the entire Act bind the Crown?

Most of the revised Acts contain an “Act binds the Crown” provision.  The exceptions are the Sale of Goods Act 1908, the Mercantile Law Act 1908, and the Frustrated Contracts Act 1944. In relation to the Frustrated Contracts Act 1944, see the note above clause 67 in the Bill (relating to section 4(2) of the Act).  Schedule 1 of the Crown Proceedings Act 1950 provides for various enactments to bind the Crown, including the Sale of Goods Act 1908 and Part 2 of the Mercantile Law Act 1908 (bills of lading).

There is an issue relating to whether or not the other Parts of the Mercantile Law Act (Parts 1, 4, and 5) bind the Crown.  Under section 27 of the Interpretation Act 1999 “No enactment binds the Crown unless the enactment expressly provides that the Crown is bound by the enactment.” Under section 4 of that Act, that Act applies unless “the context of the enactment requires a different interpretation.”

See the Law Commission Study Paper 6 “To Bind Their Kings in Chains” (NZLC SP6, 2000). Paragraphs 3 and 4 of that paper note that an intention to bind the Crown may be implied from the terms of a statute.  The Paper cites Province of Bombay v Municipal Corporation of Bombay [1947] AC 58 (PC) at 63:

“If it can be affirmed that, at the time when the statute was passed and received the royal sanction, it was apparent from its terms that its beneficent purpose must be wholly frustrated unless the Crown were bound, then it may be inferred that the Crown has agreed to be bound. Their Lordships will add that when the court is asked to draw this inference, it must always be remembered that, if it be the intention of the legislature that the Crown shall be bound, nothing is easier than to say so in plain words.”

Chapter 10 of the Legislation Advisory Committee Guidelines (2014 edition) states that “Legislation must state whether or not it binds the Crown” and “Legislation should apply to the Crown unless there are good reasons for it not to do so.”

We seek your feedback on the following questions.

Question 6: Is an intention to bind the Crown implied from the terms of any of Parts 1, 4, and 5 of the Mercantile Law Act? Does Schedule 1 of the Crown Proceedings Act 1950 indicate a clear intention that only Part 2 of the Mercantile Law Act binds the Crown?

Question 7: Is it desirable that any of Parts 1, 4, and 5 of the Mercantile Law Act should bind the Crown? Would expressly providing for these Parts to bind the Crown be a minor amendment within the powers of s 31(2)(i) of the Legislation Act 2012 (ie, the power to “make minor amendments to clarify Parliament’s intent, or reconcile inconsistencies between provisions”)?

Part 5 of the Mercantile Law Act 1908

It is questionable whether Part 5 of the Mercantile Law Act has any continuing relevance.

There is, therefore, a question as to whether the Part should be revised at all. It is possible that the whole Part is so outdated that it should either:

(a) be left as the only remaining in-force part of the Mercantile Law Act 1908 and be repealed or substantially amended at a later date; or

(b) be modernised to the extent that it can be within the revision powers (as has been done in the Bill) and be substantially amended at a later date.

The Part sets out the rights of unpaid vendors of goods when the goods are held in what are now classified as “Customs controlled areas” under the Customs and Excise Act 1996. However, many of the terms used and practices described in the Part are now of no or little continued relevance.

In particular, “bonded” warehousing no longer exists. Typically “bonded” storage allowed for goods to be kept subject to the supervision of the New Zealand Customs Service (Customs), without payment of duty, in return for security of some form. The practical advantage of this was that it allowed a person to effectively defer payment of import duties.

This sort of arrangement no longer exists, as the concept of bonded storage – while still used overseas – was removed from the New Zealand context as part of the economic reforms of the mid-1980s. At that time, it was decided that the basic principle should be that duty on imported goods should be paid at the earliest opportunity, and not deferred (except in limited cases). Modern duty-free stores at international airports, and duty-free warehouses for transit goods or ship’s providors, which are required to be licensed as Customs controlled areas, are the only remnant. In each case it is likely that the licensee of the area and the owner of the goods will be one and the same.

There is also nothing analogous to a “free warehouse”. Customs has no interest in goods for which duty has already been paid and Customs does not intend to take further enforcement action relating to them. Neither the Minister nor Chief Executive of Customs has any power to compel such goods to be held in a specified place once goods have been entered for home consumption. The nearest comparison would be where goods are held in a licensed Customs-controlled area where these have been entered (and duty paid), but have not been collected by the owner.

As a person can no longer “bond” goods, so to speak, these terms and practices are of limited or no practical effect.

Question 8: Should we revise Part 5 of the Mercantile Law Act 1908 or leave it for subsequent reform or repeal?

Transitional and savings issue: should the new Act apply to all contracts and arrangements or only to new contracts and arrangements?

There is a question as to how the new Act and repealed statutes should apply to contracts, transactions, and other arrangements entered into or made before or after the new Act comes into force. In considering the issue, it is important to be clear that the Bill will repeal, and replace, the existing statutes.

  • The new Act could apply to all arrangements, including contracts, regardless of whether they are entered into before or after it comes into force. That is, the new Act would apply, in place of the existing Acts, to existing transactions and contracts entered into during the period while those Acts were in force. This would not affect the validity or effect of anything that had already happened or the bringing or completion of proceedings that relate to an existing right, interest, or duty (see sections 17 to 22 of the Interpretation Act 1999).
    This approach may be considered appropriate in the case of a revision Bill because the Bill will have been certified as resulting in no change to the effect of the law (other than minor amendments to clarify Parliament’s intent, or reconcile inconsistencies between provisions).  It may also be favoured as the most accessible approach since users would not be required to continue to refer to the repealed Acts in the future.  In addition, the minor amendments identified in Schedule 2 of the Bill would not apply to the existing arrangements.
  • Alternatively, the former Acts could continue to apply to arrangements, including contracts, entered into before commencement of the new Act, while the new Act could only apply to arrangements and contracts entered into after its commencement.
    It may be that this approach should be taken because of practical concerns. For example, it may be that existing legal or transactional documentation refers to or adopts consistently the terms, language, and cross-references of the existing Acts.  Not taking this approach could, therefore, result in accessibility or interpretational issues.  People might have concerns that the basis on which they have structured their affairs has changed.
    This approach is also a low-risk one that has the advantage of continuity.  Existing arrangements would continue under exactly the same law so as to avoid confusion.  This approach is also more conventional – the usual approach is to apply new law to new contracts.

The provisions dealing with these transitional and savings arrangements can be found in Schedule 1 of the Bill.

The Ministry of Business, Innovation, and Employment and the Parliamentary Counsel Office prefer the approach set out in the first bullet point above because it extends the advantages of revision to contracts or arrangements entered into or made before the new Act comes into force.

That approach is consistent with and reflects:

  • the revision powers under the Legislation Act 2012
  • the revision Bill Certification process
  • the new fast-track parliamentary process under Standing Orders of the House of Representatives (because there would be no substantive law change).

The transitional approach taken during the last revision and consolidation of statutes in 1908 is in some cases also similar to that approach. See, for example, section 1(3) of the Sale of Goods Act 1908 and section 1(3) of the Mercantile Law Act 1908. Both those subsections provide that matters and proceedings commenced under the consolidated enactments could be completed under the new law.

We are particularly keen for views on this point.

Question 9: How should the Bill approach transitional arrangements?

Other Questions

Question 10: Are there other issues in the statutes that may need reform that we have not identified in Part 4 of the Explanatory Material?

Question 11: Do you have any other comments about the Bill?

Next: Part 3—Nature of drafting change »

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