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Wills, Succession and Arbitration bills introduced

Hon Clayton Cosgrove
Associate Minister of Justice

8 September 2006 Media Statement
Wills, Succession and Arbitration bills introduced

New legislation to improve existing law relating to wills, inheritance and arbitration has been introduced to Parliament today, says the Associate Justice Minister Clayton Cosgrove.

Mr Cosgrove said the Wills Bill, the Succession (Homicide) Bill and the Arbitration Amendment Bill, do not contain radical law reforms, but rather build on the existing law and make it easier to understand and to apply.

“The Law Commission has advised the Government that while the current law in these areas generally works well, there are a number of ways it could work better. The legislation implements the Commission’s recommendations to improve and clarify the existing law, and to make it more user-friendly for New Zealanders,” he said.

Key elements of the proposed changes include:

- Modernising the current wills legislation to make it more accessible and easier to understand and enabling better effect to be given to will-makers’ intentions

- Defining when a killer will be prevented from inheriting from their victim

- Improving confidentiality provisions relating to arbitration

Mr Cosgrove said the reforms reduce the risk of a will-maker's wishes being defeated by a badly drafted or incorrectly executed will.

“Existing wills that have been properly made still remain valid. If you are happy with your will then you won’t need to change it. This Bill simply improves the existing law by making it easier to give effect to will-makers’ intentions and law easier to understand," he said.

“In regard to the Succession (Homicide) Bill, there are already well-settled rules that prevent a killer from inheriting from their victim. This Bill will make those rules easier to apply by clarifying them and putting them into legislation. It will reduce the number and scope of disputes that need to be resolved by the courts."

“The Bill will clearly define the circumstances in which a person will be prevented from benefiting financially from their victim's death, and will also explain how the property should be disposed of in such cases,” Mr Cosgrove said.

Mr Cosgrove said the amendments to the Arbitration Act would clarify the current uncertainty around some arbitration procedures.

“The Bill changes and explains the confidentiality provisions around arbitration and also enhances consumer rights over purchase agreements containing arbitration clauses."

Mr Cosgrove extended his thanks to the Law Commission, whose recommendations seek to improve the law for all New Zealanders.

Media contact: Robyn Cubie, Press Secretary for Hon Clayton Cosgrove, MP
Associate Minister of Justice, 04 471 9136 or 021 227 9136

Note to Editors: A series of information sheets follow that further explain the new Bills.

The Wills Bill will;

- Use clear, modern language to help guide people to make wills

- Ensure better effect can be given to will-makers’ intentions

- Make it easier for people to make wills

Why is the existing law on wills being changed?

While the current law generally works well and no radical change is called for, the Law Commission has identified minor aspects that could be modernised.
The current wills legislation is set out in six statutes, the first of which is a British statute dating back to 1837 that is expressed in archaic language and the style of its time. A prime aim of the Wills Bill is to restate the current legislation in modern language in a single statute to make it more user-friendly.

Will the proposed changes affect my existing will?

Existing wills that have been properly made still remain valid. Generally the changes will only affect wills made after the new Bill is enacted and comes into force, so if you are happy with your current will, there is no need to change it.
There are two exceptions to that - changes to the High Court’s powers to correct errors in wills and use external evidence to interpret wills will apply to wills made before the Bill comes into force. The purpose of those new enhanced powers is to allow the Court to give better effect to will-makers' intentions as expressed in their wills.

What changes are there to the requirements for executing a will?

The proposed changes mean it will no longer be necessary to sign at the end of the will, as that has been proven to be trap for "do it yourself" will-makers. The will shall be valid regardless of where it is signed, provided the other formalities are also complied with. For example, the will still has to be witnessed and signed by two witnesses, who must be present when the will-maker signs. However, the Bill will also enable the High Court to validate a will that does not meet these formalities, provided the Court is satisfied it expresses the will-maker’s intentions.

How will changes in relationships affect wills?

The existing rules relating to the effect of marriage and divorce on wills will be extended to civil unions.
Currently, a formal separation order prevents a person inheriting from his or her estranged spouse or civil union partner if that person dies without a will, but not if he or she dies leaving a valid will. The Wills Bill will prevent an estranged spouse or civil union partner from inheriting under the deceased’s will if a separation order was in force at the time of death.

Do the proposed changes mean that I will be able to make a will without having to consult a lawyer?

Nobody is currently required to seek legal advice to make a will and that won’t change under the new legislation. The Bill seeks to make the law clearer, more accessible, and to make it easier to dispose of property in certain circumstances. Nevertheless, it may be sensible to consult a lawyer to ensure that nothing is overlooked, formalities have been met and that the will gives full effect to your intentions.
Who can make wills?

Anyone will be able to make a will. However, a person aged under 18 will only be able to make a will if:

- They are or have been married, in a civil union or in a de facto relationship;

- They have agreed to marry or enter into a civil union with another person (the will only becomes valid once the marriage or civil union actually takes place); or

- They satisfy the Family Court that they understand the nature and effect of their actions and get the Court’s approval to make a will.

Does the Bill change the provisions relating to young people?

Existing provisions that automatically allow people aged under 18 who are, or have been, married, in a civil union, or de facto relationship will be retained, but minors who have agreed to marry or enter into a civil union with another person will also now be able to make a will in contemplation of that marriage or civil union. The will becomes valid if and when the marriage or civil union actually takes place.
Existing provisions that allow minors who are not or never have been in one of these relationships to apply for approval to make a will are being retained and enhanced. There will no longer be a minimum age (currently 16) for seeking approval, and the Court will be able to grant general approvals to minors to make and revoke wills if it is satisfied the minor understands their actions. At present these minors must reapply to the Court every time they want to make or revoke a will.

How many wills are contested?
Information on the number of wills contested for validity, compliance with technical requirements as to how property can be disposed of and so on, can not be readily obtained from court records.

Will the changes reduce the number of challenges to wills and why?
Overall, it is difficult to say whether the Bill will reduce the number of disputes referred to the Courts. Disputes over the validity of a will or gift can currently be referred to the Courts and that will continue to be the case. However the Bill should make the law easier to apply and allow better effect to be given to the will-makers' intentions.

What other existing legislation allows people to challenge wills?
Wills legislation is primarily concerned with whether wills satisfy technical requirements for validity.
The key Acts that allow a substantive challenge to the way in which a testator has chosen to distribute his or her property are: the Family Protection Act 1955, which allows family members to claim against the deceased’s estate for maintenance and support where the will-maker has failed to make adequate provision for them; the Law Reform (Testamentary Promises) Act 1949 which allows claimants to seek redress from the deceased's estate for the failure to provide a promised reward for services rendered or work performed, and the Property (Relationships) Act 1976 relating to the division of property where one spouse, de facto partner or (since 2005) civil union partner dies, whether or not the relationship had ended before that person died.

The Succession (Homicide) Bill will:

- Set out in legislation and clarify the general rule that a killer cannot inherit from their victim

- Define when a killer will be prevented from inheriting from their victim

- Ensure a killer is not generally deprived of pre-existing property interests

- Reduce the number of disputes that need to be referred the courts

- Reduce the scope of any disputes that do still arise

Why is the Succession (Homicide) Bill necessary?
While the general principle that a killer cannot inherit from their victim is well established by case law, how it should apply can be uncertain in individual cases. Currently these uncertainties are resolved by the courts on a case-by-case basis, which can be costly and slow. The intention of the new legislation is to clarify the general rule that a killer cannot inherit from their victim’s estate, define the type of killings that will prevent a killer benefiting from the victim’s death, reduce the need to go to court, and reduce the scope of any disputes that do arise.

If a killer is prevented from inheriting, what happens to the benefit they would otherwise have received from the victim’s estate?
The Bill prevents a killer inheriting from their victim's estate. However, certain property interests do not fall into a person's estate when they die. The Bill calls these the "non-probate assets" and they include things like joint tenancies. These property interests will be
dealt with as if the killer died before the victim. In the case of joint tenancies two or more people jointly own property and when one dies their share automatically passes to the surviving joint tenant(s). The Bill will deal with the joint tenancy as if the killer had died
before the victim, so the killer will lose their interest in the property.
Otherwise, however, the Bill generally recognises that a killer should not be deprived of pre-existing interests, like a valid prior claim under the Property (Relationships) Act, provided that those property interests are not made more valuable or certain due to the killing.

Will battered spouses who kill their abusers be disinherited?
The Bill draws its definition of the types of killings (i.e." homicide") that will prevent a person from profiting from their victim's death from the existing criminal law relating to murder and manslaughter. Battered person syndrome is not a defence to murder or manslaughter as such. Therefore someone who - acting recklessly or intentionally - unlawfully kills their abuser, will not be able to inherit from them. However, battered person syndrome may be relevant to whether a person who kills their abuser was acting in self-defence. If they were acting in self-defence, the killing will not be unlawful in the first place and they will therefore not be disinherited.
It is worth noting that an abuser who unlawfully kills their partner will also be subject to the Bill and will not be able to benefit from that person’s estate.

How does the Bill deal with so-called "mercy killings"?
The general rule is that a person who - acting intentionally or recklessly - unlawfully kills another will not be able to inherit from their estate, even if the motive for the killing was merciful. These cases, often referred to as ”mercy killings”, will not be specifically excluded from the prohibition on profiting.
There will be two exceptions, however. First, a person who survives a suicide pact (an agreement between two or more persons to end their lives, whether or not each is to take their own life) will not be disinherited.
Secondly, there will be a limited exception for cases of “assisted suicide”. Assisted suicide is narrowly defined in the Bill and essentially concerns cases where the deceased asked the alleged killer for help to commit suicide.

The Arbitration Amendment Bill will:

- Improve the operation of the Arbitration Act 1996

- Clarify the confidentiality rules relating to arbitral and subsequent court proceedings

- Allow parties to determine for themselves how to appoint an arbitrator

- Clarify how the Act applies to consumer arbitration agreements

What is Arbitration?
Arbitration is a method of dispute resolution. It involves the settlement of a dispute by an independent person to whom the conflicting parties agree to refer their claims to resolve their dispute. One of the distinguishing features of arbitration is that the parties agree on the person, the arbitrator, who will decide the dispute. This can be contrasted to litigation where a Judge determines a dispute.
Although many arbitrators are lawyers, some arbitrators are not. Instead they have technical skills and qualifications, such as engineering, building or business management. Many arbitrators have also undertaken training in principles and practices of dispute resolution. Generally, a dispute that can be the subject of a civil proceeding can be referred to arbitration. Criminal proceedings cannot.

Why is the Act being reviewed?
In 2003 the Law Commission reviewed the Arbitration Act 1996 to determine what, if any, problems had arisen during the first few years of the Act’s operation. The Law Commission concluded that it appeared to be working well but that addressing certain identified problems would significantly improve the operation of the Act. This Bill reflects the recommendations proposed by the Law Commission as a result of their review.

Do the amendments apply to me?
Most arbitration is private commercial or contractual disputes – for example, between a small builder and a house owner, or a farmer and a share-milker. However the Act also applies to consumers.
The Bill enhances consumer rights. Under the current Act, when a consumer enters a contract with a trader they may also sign an arbitration agreement, often without realising they have agreed to go to arbitration, should a dispute arise.
The amendments will enable parties to decide, after a dispute has arisen, whether arbitration is the most appropriate form of dispute resolution. If both parties agree then arbitration of a consumer dispute may proceed. When deciding the most appropriate forum, parties will still have the option of considering whether to refer the dispute to the Disputes Tribunal. However, once the decision has been made to proceed to arbitration, the option of later referring the dispute to the Disputes Tribunal will be removed.

How does the Bill amend the Act’s confidentiality provisions?
Confidentiality is considered to be one of arbitration’s major attractions, as arbitral proceedings are closed and confidential. However there are two exceptions to this prohibition.
- The first exception is where the parties otherwise agree.
- The second exception permits disclosure of such information to a professional or other advisor of any party, if the publication, disclosure or communication is contemplated by the Act.

The present exceptions are very narrow and do not permit disclosure of information to interested parties (i.e. a professional or other adviser of one of the parties), disclosures required by law or required by a competent regulatory body but not contemplated by the 1996 Act, (i.e. before the New Zealand Stock Exchange), and disclosures for other legitimate reasons (i.e. filing and prosecution of any application to a District Court or the High Court).
The confidentially provisions do not extend to proceedings outside the arbitration process, in particular, subsequent court proceedings. The Bill clarifies that, as a general rule, arbitral proceedings are private and confidential while court proceedings are to be conducted in public.
The Bill also clarifies the circumstances for exceptions to this general rule. A party may apply to the court for an order for the whole of part of the proceedings to be conducted in private. The Bill sets out the matters a court must consider when considering such an application.

Why isn't the Bill seeking to make court proceedings, after arbitration, confidential?
The amendments to the confidentiality provisions balance the principles of party autonomy and open justice. First, parties are free to choose whether they will enable either party to appeal to the courts. Second, the Arbitrators and Mediators’ Institute of New Zealand is developing an Arbitration Appeals Tribunal which will provide a confidential alternative to the courts. Third, the role of the Courts is to develop and clarify the law not only for the immediate parties involved but also for the wider public. Fourth, open justice is a cornerstone principle of the New Zealand court system.

Clarifying the default procedures for the selection of an arbitrator

The appointment of an arbitrator in whom all parties have confidence is a fundamental element of arbitration. Normally the parties’ agreement on arbitration includes a procedure for appointing an arbitrator. The Act sets out procedures when there is a failure to follow the agreement.

When a dispute arises and the parties are unable to agree on the selection of an arbitrator, the default procedure, specified in the Second Schedule to the Act, can result in one party’s preferred arbitrator being imposed.

The Bill will change the default procedure to allow both parties to specify the default procedure in their arbitration agreement.


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