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Limited Partnerships Bill (Consistent) (Sections 5, 14, 21 and 25(c)) [2007] NZBORARp 19 (16 July 2007)

Last Updated: 2 January 2019

Limited Partnerships Bill

16 July 2007

Attorney-General

LEGAL ADVICE

CONSISTENCY WITH THE NEW ZEALAND BILL OF RIGHTS ACT 1990: LIMITED PARTNERSHIPS BILL

1. We have considered whether the Limited Partnerships Bill (PCO 6662/12) (the "Bill") is consistent with the New Zealand Bill of Rights Act 1990 (the "Bill of Rights Act"). We understand that the Bill is likely to be considered by the Cabinet Legislation Committee at its meeting on 19 July 2007.

2. We considered potential issues of inconsistency with sections 14, 21 and 25(c) of the Bill of Rights Act and assessed whether or not these issues are justifiable under section 5 (Justified limitations) of that Act. To that end we examined whether the relevant clauses serve an important and significant objective and whether there is a rational and proportionate connection between these clauses and that objective.[1]

3. We have reached the conclusion that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act.

PURPOSE

4. The purpose of this Bill is to establish a modern regulatory regime for limited partnerships that:


• facilitates the development of the venture capital industry in New Zealand.

5. The Bill seeks to achieve this purpose by repealing the special partnership provisions of the Partnership Act 1908, regulating limited partnerships consistently with international norms and providing a form of legal and tax structure that is recognised and accepted by investors.

BILL OF RIGHTS ACT ISSUES

Section 14: Freedom of Expression

6. Section 14 of the Bill of Rights Act provides:

"Everyone has the right to freedom of expression, including the freedom to seek, receive, and impart information and opinions of any kind and in any form".

7. The right to freedom of expression in section 14 extends to all forms of communication that attempt to express an idea or meaning.[2] The right has been interpreted as including the right not to be compelled to say certain things or to provide certain information.[3]

Naming of Limited Partnership

8. Clause 28 (Name of limited partnership must include words limited partnership) of the Bill requires that the name of a limited partnership includes the words ‘limited partnership’ or the abbreviation ‘LP’ or ‘L.P.’. Under clause 29(1) the Registrar may object to the name with which a limited partnership proposes to register and may refuse to register the partnership with that name.

9. Under clause 31(1) (Registrar may change name) the Registrar may direct the limited partnership to apply to change its name to a name that complies with this Act, if the Registrar believes on reasonable grounds that a limited partnership has been registered with a name with which it ought not to have been registered. If the

limited partnership does not, within the time specified in the direction, apply to change its name to a name that complies with this Act, the Registrar may change its name by amending the register (subclause (3)).

10. The choice of name is arguably a form of expression for the purpose of section 14 of the Bill of Rights Act. Clauses 29 (Registrar may object to name) and 31 of the Bill appear to confer some discretion on the Registrar as to whether or not to approve a name. However, clause 29(2) stipulates that the Registrar must not register a limited partnership with a name if:

• the use of the name would contravene an enactment; or


• the name is, in the Registrar’s opinion, offensive.

11. The Registrar must, by virtue of section 3 of the Bill of Rights Act, exercise his powers consistently with the Bill of Rights Act. Therefore, while these grounds for refusing to approve a name could be seen as a prima facie limitation on the freedom of expression, we are of the view that they appear to be reasonable.

Section 21: Right to be Secure against Unreasonable Search and Seizure

12. Section 21 provides:

"Everyone has the right to be secure against unreasonable search or seizure, whether of the person, property, correspondence or otherwise."

13. There are two limbs to the section 21 right. First, section 21 is applicable only in respect of those activities that constitute a "search or seizure". Second, where certain actions do constitute a search or seizure, section 21 protects only against those searches or seizures that are "unreasonable" in the circumstances.

14. Clause 71 (Registrar’s powers of inspection) confers a power on the Registrar, or a

person authorised by the Registrar, to:

• require a person to produce for inspection relevant documents[4] within that

person’s possession or control;

• inspect and take copies of relevant documents;


• retain relevant documents for a reasonable period..

15. Clause 71 also stipulates that a person must not obstruct or hinder the Registrar or a person authorised by the Registrar while exercising this power. A person who fails to comply with the above requirements or obstructs or hinders the exercise of this power, commits an offence and is liable on conviction to a fine not exceeding

$10,000.

16. The objective of the inspection power in clause 71 is to ensure the integrity of the regulatory framework. The Registrar (who is tasked with the enforcement of the Act) requires the powers of inspection to effectively investigate compliance with the Act. These powers of inspection are the same as those in the Companies Act.

17. We are of the view that there is a rational and proportionate connection between the inspection power and this objective, because the inspection power is limited and can only be exercised for the purposes of:


18. In addition, clause 72 (Disclosure of information and reports) places limits on the disclosure of documents or information obtained by the Registrar under its powers

of inspection under clause 71 in order to protect the privacy both in relation to the Limited Partnership and any private individuals concerned. The documents or information obtained may only be disclosed consistently with the purposes of the inspection powers granted in clause 71. Furthermore, clause 74 (Exercise of powers under section 71 not affected by appeal) provides that, in the event of a successful appeal against the exercise the power under clause 71, the Registrar must ensure the destruction of documents and materials.

19. We, therefore, conclude that the clauses in the Bill relating to the powers of inspection do not appear to constitute unreasonable searches and seizures and can be exercised consistently with section 21 of the Bill of Rights Act.

Section 25(C): Right to Be Presumed Innocent Until Proved Guilty

20. Section 25(c) of the Bill of Rights Act provides:

"Everyone who is charged with an offence has, in relation to the determination of the charge, the right to be presumed innocent until proved guilty according to law".

21. This means that an individual must not be convicted where reasonable doubt as to her or his guilt exists, meaning the prosecution in criminal proceedings must prove, beyond reasonable doubt, that the defendant is guilty. Strict liability offences give rise to an issue of inconsistency with section 25(c) because the accused is required to prove (on the balance of probabilities) a defence to escape liability; whereas, in

other criminal proceedings an accused must merely raise a defence in an effort to

create reasonable doubt. Where an accused is unable to prove the defence, then he or she could be convicted even though reasonable doubt exists as to his or her guilt.

22. The Ministry of Economic Development has advised us that the Bill contains several strict liability offences. These offences give rise to a prima facie issue of inconsistency with section 25(c) of the Bill of Rights Act:

• clause 28(4) (Name of limited partnership must include words limited partnership)

• clause 36 (Distribution must not be authorised unless limited partnership solvent).


• clause 53(4) (General partners must send written consent of new general partner to

Registrar)

• clause 63(6) (Requirement to change registered office)

• clause 68(4) (Records of limited partnership)

• clause 69(11) (Annual return)

• clause 71(5) (Registrar’s powers of inspection)

• clause 72 (4) (Disclosure of information and reports)

• clause 89(4) (Overseas limited partnership must register)

• clause 95(2) (Notification of changes relating to overseas limited partnership)

• clause 97(6) (Annual return of overseas limited partnership)

23. We have considered whether the above clauses can be considered a reasonable limit on the right to be presumed innocent until proved guilty by law in terms of section 5 of the Bill of Rights Act. In our view, strict liability provisions are likely to be justified where: the offence relates to a public welfare regulatory regime rather than truly criminal behaviour; the information sought is 'peculiarly within the realm of the defendant'; and the penalty for breach is at the lower end of the scale.

24. We note that all the offences in the Bill are regulatory in nature. The objectives of the offence provisions in the Bill are to ensure:


• the effective enforcement of the provisions of the Bill (clauses 63(6), 71(5) and

72(4)); and


25. A person is liable on summary conviction for the above offences to a fine not exceeding $10,000 (except for the offences in clauses 28(4), 36 and 63(6) which make the person liable to a fine not exceeding $5,000). The Ministry of Economic Development has advised us that the amount of each fine is the same as for the analogous offences in the Companies Act 1993.

26. In light of the objectives above, we conclude that the limit these strict liability and reverse onus offences place on section 25(c) of the Bill of Rights Act is justified in terms of section 5 of that Act.

CONCLUSION

27. Overall, we have formed the view that the Limited Partnerships Bill appears to be consistent with the Bill of Rights Act.

Melanie Webb

Manager, Ministerial Advice

Office of Legal Counsel

Margaret Dugdale
Policy Manager
Bill of Rights/Human Rights Team

Footnotes

1 In applying section 5, we have had regard to the guidelines set out by the Court of Appeal in Ministry of Transport (MOT) v Noort [1993] 3 NZLR 260; Moonen v Film and Literature Board of Review [1999] NZCA 329; [2000] 2 NZLR 9; and Moonen v Film and Literature Board of Review [2002]

2 NZLR 754.

2 R v Keegstra [1990] INSC 224; [1990] 3 SCR 697,729,826

3 RJR MacDonald v Attorney-General of Canada (1995) 127 DLR (4th)1

4 In this clause, "relevant document", in relation to a limited partnership, means a document that contains information relating to the limited partnership, or money or property that is, has been, managed, supervised, controlled, or held in trust by or for the limited partnership.

In addition to the general disclaimer for all documents on this website, please note the following: This advice was prepared to assist the Attorney-General to determine whether a report should be made to Parliament under s 7 of the New Zealand Bill of Rights Act 1990 in relation to the Limited Partnerships Bill. It should not be used or acted upon for any other purpose. The advice does no more than assess whether the Bill complies with the minimum guarantees contained in the New Zealand Bill of Rights Act. The release of this advice should not be taken to indicate that the Attorney-General agrees with all aspects of it, nor does its release constitute a general waiver of legal professional privilege in respect of this or any other matter. Whilst care has been taken to ensure that this document is an accurate reproduction of the advice provided to the Attorney-General, neither the Ministry of Justice nor the Crown Law Office accepts any liability for any errors or omissions.


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