Companies (Address Information) Amendment Bill

Members, we come now to clause 7. This is the debate on the amendment to Section 388A, “Service of other documents on directors”. The question is that clause 7 stand part. Hamish—[Interruption] Tom Rutherford.

Thank you, Mr Chair. Clause 7—

CHAIRPERSON (Greg O’Connor): We’re getting a bit of a blackspot over there, I’m afraid, I’m sorry. Carry on, and I apologise for my tardiness in your name. Carry on.

TOM RUTHERFORD: No offence taken, Mr Chair. I refer to clause 7, “Section 388A amended (Service of other documents on directors)”: “(1) In section 388A(a), after ‘(b),’, insert ‘(ba),’. (2) In section 388A(b), after ‘residential address’, insert ‘or alternative address’.” My question remains: how will the clause 7 amendments to section 388A affect legal practitioners serving documents on directors? Will there be any hierarchy of service methods, or will alternative addresses, under these provisions, have equal status with residential addresses? How will legal practitioners know which address under section 388A to use for service?

I remind the member: if you are a director of a company and you disclose both your residential address and the alternative, if I am the legal practitioner, how will I know which of those addresses to use for service? Is it, as Mike Butterick said earlier, based on the numerical order of the residential and then the alternative? Is it based on the alphabetical order—which one comes first; which one comes next? How would I know, as the legal practitioner, which address I am going to use for service? Or is it expected of our legal practitioners to travel to the first one; to see, potentially, that that is not going to be the address to use for service, and then travel to the next one? Is that potentially an option? What are the expectations that we would then put on those people to use their direction to decide which of the two is the one we’re going to use as the address for service?

My friend Cameron Luxton raises a very, very valid point. We live in a mixed-terrain country with long gravel roads, windy roads—very mixed terrain. What if they are driving a Toyota Corolla and it’s supposed to be for four-wheel drives, hypothetically? What if people want to fly business class but there is only economy available? What would you do if you were a member of the Green Party, with that option? What would you do? What would your option be? So how would that person that is a legal practitioner looking at the director’s information, seeing both their residential address and an alternative address, not showing any particular order or particular preference, with neither one put in bold to say that that is the preferred one or used as number one and the other one as the backup—how are they, then, to know which one they’re going to use for service? How do they know? Or do we expect them to factor that in to the allocation of their time? What if the residential address is somewhere in Auckland, and then the alternative address is shown as an address on Stewart Island?

What do we expect of our legal practitioner in that scenario? Are we expecting them to travel to both and hope they land on the first one, on their first guess, with a fifty-fifty shot? How are they to know which one, unless we clearly specify and identify that the alternative address is the preference, and if you can’t get them at the alternative address but they’ve made their residential address available so that is number two—but only after you’ve attempted to get them at the alternative address? Or what if it’s the other way around? They’re putting the alternative address as a backstop, as a backup, if something were to happen for the residential address if they weren’t available, if there were accessibility challenges that they couldn’t quite face.

It’s really not that clear, both in clause 6, which I talked about a little earlier, and clause 7—this one is around section 388A: how will legal practitioners serving documents on directors know which address to use for service? Will there be a hierarchy of service methods, or will alternative addresses under these provisions hold an equal status with residential addresses? I would love for the member to clarify that for me.

I note that the same arguments apply for the next clause, as well, and I note that they are possibly just as irrelevant. Section 388A of the principal Act is “Service of other documents on directors”: “A document, other than a document in any legal proceedings, may be served on a director as follows: (a) by any of the methods”—they’re not hierarchical; any of the methods can be used—“set out in … section 387A; or (b) by posting it … to the director’s residential address”—or now by posting it to the director’s alternative address—“or (c) by posting it to the company’s registered office or address for service … or (d) by sending it by fax machine to a telephone number used for the transmission of documents by fax at the director’s residential address”—or alternative address and so on—“or (f) by emailing it to the director at an email address”—we are in modern times now. I’m surprised we can’t Snapchat one of the directors or something like that or signal the preferred method of communication for secret documents these days.

There’s a whole variety of methods someone may use—whichever one is most convenient. They are not in any hierarchy. Frankly, I do rather trust our legal practitioners to be able to work it out as to which one is easiest to use. I think we’ve heard that lawyers can be quite smart; I should think they are smart enough to work out where to—

Tom Rutherford: What about chartered accountants?

Hon Dr DEBORAH RUSSELL: —and chartered accountants too.

Tom Rutherford: Well, have a chat with Duncan Webb!

Hon Dr DEBORAH RUSSELL: I disassociate myself with my colleague’s comments.

Dr Hamish Campbell: Mr Chair.

CHAIRPERSON (Greg O’Connor): Hamish Campbell.

Excellent. Thank you, Mr Chair. I appreciate it is getting late in the evening, but I appreciate you getting the name right. I think Dale Carnegie said, “Isn’t your name the most favourite sound”, or something like that. Anyway, getting back to clause 7, “Section 388A amended (Service of documents on directors)”: so just in subclause (1), “In section 388A(a), after ‘(b),’, insert ‘(ba),’.”—but then in subclause (2) of this: “In section 388A(b), after ‘residential address’, insert ‘or alternative address’.” Surely, the second clause here actually supersedes the first clause, really, because, otherwise, we’re not really adding anything more under new paragraph (ba). I think it’s maybe a bit of a drafting error here, and we have ended up adding a bit of complexity. I’ve already heard about the risk of confusion in the other uses of some of the addresses and things like that.

Really, it’s just making sure we actually have the drafting of this clause correct, because I’m a little bit unclear what the inserting of “(ba)” will actually do, since this subclause, in (2), is probably going to reach the goal of what the bill is trying to achieve—because, by doing that, of course, it is removing that, kind of, essentialness of the residential address. The alternative address could be used, which, of course, is what I think the bill is trying to do. But I do just want clarification on that issue.

It’s really quite straightforward—insert “(ba)” into 388A so that (ba) is you can leave it—leave the document—at the director’s alternative address. At 388A(b), you post it to the director’s residential address. One envisages envelope, stamp, putting it in the post; the other one envisages walking it up to the door. It’s straightforward.

Clause 7 agreed to.

Clause 8 Section 391 amended (Service of documents on shareholders and creditors)