Best of: Private Law (Volume 1, Issue 3)
Our ‘Best of’ ejournal editions are designed to showcase the best of the Faculty’s fantastic scholarship.
In an increasingly globalised world, transactions and disputes become ever more complex and private law plays crucial rule in addressing these challenges. In this edition of the University of Auckland Faculty of Law’s Best of SSRN series, we present a wide range of papers tackling problems that continue to arise before the courts of Aotearoa New Zealand and beyond. These include the use of trusts to avoid taxation, a reconceptualisation of the account of profits remedy, the case for common law protection against the misappropriation of personality, and the abolition of the volenti defence under the law of torts.
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"Account of Profits: An Exemplar of Fiduciary Doctrine?"
Peter Devonshire
The strict obligations governing the conduct of fiduciaries is intended to discourage temptation and encourage fidelity. These objectives potentially lose their force if the remedy has a different emphasis. An account of profits serves a crucial function in disgorging illicit gains. The determination of accountable gains and the amount that must ultimately be disgorged is a phased exercise which does not necessarily reflect the rigour of the duty it enforces. The implications are explored with reference to causation and allowances. The former is consistent with strict fiduciary standards to the extent that unauthorised gains are readily imputed to the breach. The latter is a nuanced exercise in which the relationship between duty and remedy is more tenuous. It is concluded that this is not necessarily inconsistent with the objectives of equity and that each can be explained on a principled basis.
This article was first published by Thomson Reuters in the New Zealand Universities Law Review and should be cited as (2023) 30 NZULR 549. For all subscription inquiries please phone, from New Zealand: 0800 10 60 60, from Overseas: +64 4 801 0001 or see online at www.thomsonreuters.co.nz.
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"Justifying Source Taxation in the Digital Age"
Craig Elliffe
Volenti non fit injuria allows a negligent defendant to escape liability by showing that the claimant voluntarily and willingly accepted the risk in question. This article combines the theoretical limitations of the volenti defence with a case analysis of how its application has played out in the "real world", and argues it is not fit for modern tort law. The defence has a controversial and chequered history, being described as a "so-called principle. .. of little help: indeed, it is confusing, unnecessary, and if we are not careful, it will lead us to the wrong outcome". It is submitted that volenti is based on unjustified concepts of people agreeing to risks, leads to harmful outcomes and that the defence does not fit with current approaches to tort liability. This article therefore concludes that the harmful outcomes of the volenti defence far exceed any potential benefits provided, and the defence should therefore be abolished.
"Rethinking Risk-Taking: The Death of Volenti?"
Jodi Gardner
Volenti non fit injuria allows a negligent defendant to escape liability by showing that the claimant voluntarily and willingly accepted the risk in question. This article combines the theoretical limitations of the volenti defence with a case analysis of how its application has played out in the "real world", and argues it is not fit for modern tort law. The defence has a controversial and chequered history, being described as a "so-called principle. .. of little help: indeed, it is confusing, unnecessary, and if we are not careful, it will lead us to the wrong outcome". It is submitted that volenti is based on unjustified concepts of people agreeing to risks, leads to harmful outcomes and that the defence does not fit with current approaches to tort liability. This article therefore concludes that the harmful outcomes of the volenti defence far exceed any potential benefits provided, and the defence should therefore be abolished.
"Using New Zealand Trusts to Escape Other Countries' Taxes"
Michael Littlewood
The New Zealand tax system was until recently so structured as to allow foreigners to use the country as a tax haven. Specifically, it allowed them to use trusts established in New Zealand (referred to as “foreign trusts”) to avoid and evade the tax they would otherwise have had to pay in their home country. It would seem to have been possible, too, for foreigners to use such trusts for other illicit purposes, in particular money-laundering and financing terrorism. In April 2016 the publicity given to the Panama Papers attracted attention to this aspect of the New Zealand tax system. The government responded by appointing a distinguished accountant, John Shewan, to advise. He recommended that the law be changed and the government accepted his recommendations. This paper explains how the foreign trust rules work, and how the amending legislation was designed to preclude this form of abuse.
"The Corporate Legal Person"
Susan Watson
In the decades following Armagas v. Mundogas, a leading case on some basic principles of agency law, the case has become surrounded by at least as many lukewarm lieutenants as stout defenders. There is in fact an understandable tension between not subjecting persons to transactions to which they have demonstrably not agreed and protecting the expectations of those who not unreasonably have trusted an intermediary accurately to report their principal’s willingness to transact. Protecting expectations, including “the security of contracting”, is generally more fashionable amongst lawyers now than it once was. This article addresses two of the holdings in Armagas (the need for a holding out by a (non-consenting) principal as to an agent’s authority before liability arises in either contract or the tort of negligent misstatement) and two of the dicta (being put on inquiry as to a lack of authority, and the unreliability of a course of dealing between the parties), and reviews the pronouncements of United Kingdom and England and Wales judges on each of them. The article seeks to reinforce Armagas on the first three, but not the last.
"Some Wear and Tear on Armagas v. Mundogas — The Tension between Having and Wanting in the Law of Agency"
Peter G. Watts
In the decades following Armagas v. Mundogas, a leading case on some basic principles of agency law, the case has become surrounded by at least as many lukewarm lieutenants as stout defenders. There is in fact an understandable tension between not subjecting persons to transactions to which they have demonstrably not agreed and protecting the expectations of those who not unreasonably have trusted an intermediary accurately to report their principal’s willingness to transact. Protecting expectations, including “the security of contracting”, is generally more fashionable amongst lawyers now than it once was. This article addresses two of the holdings in Armagas (the need for a holding out by a (non-consenting) principal as to an agent’s authority before liability arises in either contract or the tort of negligent misstatement) and two of the dicta (being put on inquiry as to a lack of authority, and the unreliability of a course of dealing between the parties), and reviews the pronouncements of United Kingdom and England and Wales judges on each of them. The article seeks to reinforce Armagas on the first three, but not the last.
The prohibition on filing a trade mark application in bad faith – now contained in s 17(2) – was a newly introduced provision in the Trade Marks Act 2002 (2002 Act). It was an (indirect) legal transplant from the European Trade Mark Directive. Following the enactment of the 2002 Act, New Zealand courts and adjudicators turned to English judicial interpretations for guidance on the meaning of bad faith. In this article, I demonstrate how other features of the statutory regime in the 2002 Act concerning the acquisition of trade marks have stunted the operation of s 17(2). I argue that bad faith has become something of a wilted transplant, which risks New Zealand’s law in the area remaining complex, rigid and static. I trace developments in Europe where I suggest a more teleological or purposive view of the meaning of bad faith is emerging. In light of these developments, I advocate for New Zealand courts and adjudicators to adopt such a teleological approach. I also suggest some statutory reform to allow such an approach to reinvigorate bad faith and make New Zealand law less complex and more flexible in addressing abuses of the trade mark system.
There is a gap in the law in Australia and New Zealand. Australia, while ahead in many jurisprudential fields, is lagging behind in privacy law protection. New Zealand, although adopting two common law privacy torts, recently refused to develop a third privacy tort based on the American privacy tort of misappropriation of personality. In light of global technological advances, and in the age of social media, there is a need to develop the tort of misappropriation of personality to protect an individual’s right to identity privacy. This article addresses the merits of adopting the privacy tort of misappropriation of personality in the context of other common law actions and their shortfalls – and, in particular, why the tort of passing off is inadequate at protecting an individual’s right to identity privacy.
Please note that a later version of this article was accepted for publication by the Torts Law Journal. This is a draft.
There was a fair amount of excitement among contract law scholars in early 2018 when the Supreme Court heard the case of Rock Advertising Ltd v MWB Business Exchange Centres Ltd. In fact, excitement levels were heightened further than usual because the Supreme Court was faced with not one, but two “truly fundamental issues in the law of contract”. These two fundamental issues were extremely important to the formation of variation contracts. First, the Supreme Court had an opportunity to accept or reject Williams v Roffey Bros & Nicholls (Contractors) Ltd and its “practical benefit test” for consideration (something that no final court of appeal in the common law world had yet done), and could determine whether Foakes v Beer still governed part-payment of debt cases in England. Secondly, the Supreme Court was also faced with argument about the efficacy of “no oral modification” clauses in written contracts.
Ultimately however, at least half of this excitement was left unfulfilled. The Supreme Court’s decision focussed almost entirely on the “no oral modification” clause and left the consideration point for another day. In light of the Supreme Court’s decision, this piece will examine the state of the law relating to the consideration needed to support an agreement to accept part payment of a debt in satisfaction of the whole. Since the Supreme Court did not comment substantively on this point, where does that leave Foakes v Beer? Is it still binding authority? Or has the Court of Appeal’s decision in the MWB litigation on this point fatally undermined it?
Article 22 of the European Union's (EU's) Copyright in the Digital Single Market Directive requires EU Member States to permit creators to revoke copyright grants if there is a 'lack of exploitation' of the works. These types of provisions can help creators remonetize and increase the availability of works that may have gone dormant, especially in the context of concerns about imbalanced bargaining relationships between creators and publishers.
Surely a public authority should be liable when it negligently fails to do its job of protecting people? And is the distinction between acts and omissions not in any event impossible to draw? This article addresses both of these doubts about the omissions rule in the law of negligence and its application to public authorities. It seeks to show that the omissions rule rests on more secure foundations than is often supposed.
First, confusion about the definition of the omissions category can be kept at bay. Secondly, justification for the rule is also available: the defendant in an omissions claim is a causally peripheral party, and the special requirements for liability under the omissions rule serve to provide a sufficient reason for holding such a causally peripheral party responsible. That justification is applicable to public authority defendants as much as to private defendants. The most uncertain question is whether the special risk requirement that maintains the usual ‘no duty to the world at large’ rule in this context is always appropriate in public authority cases – this article suggests some reasons why that may well be so.