IAPMO Mechanical Inspector (IAPMO MI)

Correct: Under the Conduct and Client Care Rules, professional fees must be fair and reasonable. Disbursements, however, are distinct out-of-pocket expenses incurred on behalf of the client. These must be passed on at the actual cost (unless otherwise agreed) to ensure transparency and to prevent the practitioner from making an undisclosed profit on third-party services.

Incorrect: Bundling fees and disbursements without itemization fails the transparency requirements of the Conduct and Client Care Rules. Disbursements are not overhead; they are specific costs incurred for a specific client matter. There is no regulatory requirement for practitioners to use personal funds for disbursements; in fact, trust accounts are specifically used to hold client funds for such purposes before they are paid out.

Takeaway: Practitioners must distinguish between professional fees, which are subject to a reasonableness test, and disbursements, which represent the actual costs of third-party services incurred on the client’s behalf.

Correct: Under the High Court Rules (and District Court Rules) in New Zealand, the court may grant summary judgment if the plaintiff satisfies the court that a defendant has no defense to a cause of action in the statement of claim. The legal test is whether the defendant has an ‘arguable defense’; if there is no real prospect of a defense succeeding, the court can bypass a full trial to ensure judicial efficiency.

Incorrect: Demonstrating the balance of convenience is a standard used for interlocutory injunctions, not summary judgment. Establishing that a defense is likely to fail on the balance of probabilities is the standard of proof for a full trial, whereas summary judgment requires the higher threshold of showing no arguable defense exists. Failing to file a defense within the prescribed timeframe results in a judgment by default, which is a separate procedural mechanism from summary judgment.

Takeaway: Summary judgment in New Zealand is an expedited procedure available only when the applicant can prove the opposing party has no arguable defense or cause of action.

Correct: Under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009, legal practitioners are required to conduct ongoing customer due diligence (CDD). This includes monitoring the relationship to ensure that the transactions are consistent with the practitioner’s knowledge of the customer and their risk profile. A sudden change to an offshore shell company is a significant risk trigger that necessitates a refreshed risk assessment and potentially enhanced due diligence (EDD) before proceeding.

Incorrect: The duty to the court is a fundamental ethical obligation but primarily applies to litigation and the administration of justice rather than the administrative aspects of a property settlement. Fidelity Fund Rules are designed to protect clients against the theft or misappropriation of trust funds by practitioners, not to regulate corporate structure changes. Audi Alteram Partem is a principle of natural justice meaning ‘hear the other side,’ which applies to adjudicative processes and procedural fairness rather than commercial due diligence obligations.

Takeaway: Legal practitioners must conduct ongoing and refreshed due diligence under the AML/CFT Act when significant changes occur in a transaction’s structure or the client’s identity.

Correct: Under Section 329 of the Property Law Act 2007, the court must have regard to several specific factors when considering an application for access to landlocked land. One of the primary considerations is the conduct of the parties, which includes any attempts made to negotiate reasonable access or to settle the dispute before seeking judicial intervention. This ensures that the court is a last resort and that parties have acted in good faith.

Incorrect: The Property Law Act 2007 does not impose a minimum ownership period, such as ten years, before an owner of landlocked land can apply for relief. While the market value of a security interest might be a concern for a broker-dealer, it is not a statutory factor the court must consider under Section 329. The failure of a territorial authority to provide infrastructure is not a primary statutory consideration; the focus is on the nature of the land, the circumstances of it becoming landlocked, and the relative hardship between the applicant and the neighbor.

Takeaway: When seeking access to landlocked land under the Property Law Act 2007, the court prioritizes the conduct of the parties and their prior negotiation efforts over rigid ownership timeframes or third-party infrastructure failures.

Correct: In New Zealand, the Arbitration Act 1996 distinguishes between Schedule 1 (which applies to all arbitrations) and Schedule 2 (which contains additional optional rules). For domestic arbitrations, Schedule 2 applies automatically unless the parties agree otherwise. Clause 5 of Schedule 2 allows for appeals to the High Court on questions of law. If the risk committee prioritizes finality and wants to prevent the possibility of an award being tied up in the court system on legal technicalities, they must specifically opt out of this provision in their arbitration agreement.

Incorrect: Relying on Schedule 1 is insufficient because Schedule 2 applies by default to domestic arbitrations, meaning the right to appeal on points of law remains active unless excluded. The UNCITRAL Model Law is already the foundation of the Arbitration Act 1996; parties cannot simply ‘bypass’ the Act’s schedules by citing the Model Law for a domestic contract. Requiring preliminary opinions from the High Court would significantly increase court intervention and delay the resolution process, which is the opposite of the committee’s goal of finality.

Takeaway: For domestic arbitrations in New Zealand, parties must explicitly opt out of Schedule 2 provisions if they wish to limit the court’s ability to review an award on points of law.

Correct: In the New Zealand legal and regulatory framework, ‘good character’ or ‘fit and proper’ assessments are not limited to criminal records. Prior disciplinary findings from a tribunal are highly relevant to professional integrity. However, the principles of natural justice (specifically audi alteram partem) require that the individual be given a fair opportunity to respond to the evidence or provide context before a decision affecting their rights or status is finalized.

Incorrect: The claim that character evidence is only relevant in criminal proceedings is incorrect; it is a standard component of professional and regulatory ‘fit and proper’ tests. Administrative tribunal decisions are valid forms of evidence and are not rendered inadmissible by the court hierarchy. While the Fidelity Fund Rules relate to professional conduct, they do not mandate an automatic, non-discretionary termination of all business relationships based on any prior disciplinary record without a nuanced risk assessment.

Takeaway: Professional character assessments in New Zealand must balance relevant prior disciplinary evidence with the principles of natural justice and procedural fairness.

Correct: In New Zealand, the Land Transfer Act 2017 follows the Torrens system, where the register is the definitive record of land ownership. The principle of indefeasibility generally protects the registered owner against claims of adverse possession. While adverse possession (prescriptive title) exists in a very limited scope for ‘abandoned’ land or land not yet brought under the Act, it is not a standard method of acquiring title for registered land, especially after only 15 years (the threshold is typically 20 years for the rare cases where it applies).

Incorrect: Option B is incorrect because it cites a 12-year period which is common in other jurisdictions but not the standard for adverse possession in New Zealand, and it ignores the protections of the Torrens system. Option C is incorrect because a ‘gift’ of use does not create a constructive trust that overrides a registered title under the principle of indefeasibility. Option D is incorrect because the Property Law Act 2007 does not contain provisions that automatically convert a license into a fee simple estate based on 10 years of silent consent.

Takeaway: Under the New Zealand Torrens system, the principle of indefeasibility of title makes adverse possession claims against registered land nearly impossible and subject to strict statutory requirements.

Correct: Under Section 56 of the Evidence Act 2006, litigation privilege applies to communications between a party or their legal adviser and any other person (such as a third-party consultant) if the communication was made for the dominant purpose of preparing for a proceeding that is currently underway or is reasonably apprehended. In this scenario, the document was created specifically for the anticipated High Court litigation, satisfying the dominant purpose test.

Incorrect: Legal advice privilege under Section 54 is generally restricted to communications between a lawyer and their client; it does not typically extend to third parties unless they are acting as an agent for communication. The claim that privilege does not exist because proceedings had not yet formally commenced is incorrect, as litigation privilege applies to ‘reasonably apprehended’ proceedings. The professional membership of the consultant is irrelevant to the application of litigation privilege, which focuses on the purpose of the document rather than the credentials of the third party.

Takeaway: Litigation privilege in New Zealand protects communications with third parties provided the dominant purpose of the communication is for actual or reasonably apprehended legal proceedings.

Correct: Under the principles of natural justice and procedural fairness, specifically the concept of ‘audi alteram partem’ (hear the other side), an employer must provide an employee with the relevant information and a fair opportunity to respond before taking action that results in an unjustified disadvantage. In the context of a personal grievance, failing to allow the employee to address the findings of a sanctions screen before revoking system access constitutes a significant procedural failure under New Zealand law.

Incorrect: The professional qualification of the compliance officer does not satisfy the procedural requirements of natural justice for the affected employee. The principle of ‘nemo judex in causa sua’ (no one should be a judge in their own cause) is a fundamental rule of natural justice that ensures impartiality; an internal audit charter cannot ‘override’ this to validate a biased process. There is no legal mechanism in the District Court to grant a standing injunction that bypasses the statutory 90-day period for raising a personal grievance under the Employment Relations Act.

Takeaway: To mitigate the risk of personal grievances, employers must uphold procedural fairness by ensuring employees have the right to be heard before any adverse employment actions are taken.

Correct: Audi alteram partem, which translates to ‘hear the other side,’ is a fundamental principle of natural justice and procedural fairness in the New Zealand legal system. It requires that all parties to a dispute be given a fair opportunity to respond to the evidence and arguments presented against them. By providing a confidential report to the mediator that the borrower could not see or rebut, the bank’s legal counsel denied the borrower their right to a fair hearing and the opportunity to present their case effectively.

Incorrect: Nemo judex in causa sua refers to the rule against bias, stating that no one should be a judge in their own cause; while relevant to the impartiality of the mediator, it does not specifically address the failure to share evidence. The doctrine of stare decisis relates to the legal principle of following judicial precedents from higher courts and is not a principle of natural justice. The principle of statutory interpretation refers to the methods used by courts to interpret legislation and does not govern the procedural fairness of a dispute resolution hearing.

Takeaway: The principle of audi alteram partem ensures that all parties in a commercial dispute have the right to be heard and to respond to any evidence that may influence the outcome of the proceedings.