5.1 DEFINITIONS
In this Section and its Attachments:
Adjustment means, in respect of certain Potential Properties, the adjustment process to be carried out and completed in accordance with paragraph 8 of the Valuation Methodology, commencing on the Adjustment Date;
Adjustment Date means the last Business Day after the expiration of the period of 206 Business Days commencing on the Legislation Date;
Business Day means a day (other than Saturday or Sunday) on which registered banks are open for normal banking business in Wellington and Christchurch but shall exclude any day in the period commencing 25 December in any year and ending on 5 January in the following year, inclusive, and shall be deemed to commence at 9.00 am and to terminate at 5.00 pm;
Completion Date means the next Business Day after the expiration of the period of 309 Business Days commencing on the Legislation Date;
Crownmeans Her Majesty the Queen in right of New Zealand;
Due Diligence Disclosure means delivery by the Crown or the Vendor Agency of the information and confirmations described in Attachment 5.3;
Final Selection Date means the next Business Day after the expiration of the period of 247 Business Days commencing on the Legislation Date;
Initial Rental means, in respect of each Leaseback Property, the annual rent payable by the relevant Vendor Agency from the commencement date of the Leaseback, as determined by the methodology and process, including Valuation, set out in the Valuation Methodology;
Initial Selection Date means the next Business Day after the expiration of the period of 41 Business Days commencing on the Legislation Date;
Leaseback means, in respect of each Leaseback Property, the lease to be granted by the Crown to the relevant Vendor Agency on, or prior to, the transfer of that property to Te Runanga as referred to in clause 5.6.2;
Leaseback Properties means those Properties which are described in Attachment 5.2;
Legislation Date means the date on which this Deed becomes unconditional;
Potential Property means any Property that is indicatively selected by Te Runanga, on a non-binding basis and in accordance with clause 5.4, as a potential Settlement Property;
Property means each property described in Attachment 5.1 and, where relevant, in the Deed Maps referred to in Attachment 5.1. The first column of Attachment 5.1 indicates groupings of descriptions of parcels of land which, together, comprise a single Property;
Registered Valuer means a person registered under the Valuers Act 1948 and who holds a current annual practising certificate;
RFR means the right of first refusal provided by the Crown to Te Runanga and set out in Attachment 9.1;
Settlement Legislation means the bill to give effect to the Settlement referred to in clause 17.3 and, when the bill has become law, means, if the context requires, the Act resulting from the passing of such bill;
Settlement Property means any Potential Property that Te Runanga selects to acquire as part of Settlement in accordance with clause 5.5;
Te Runanga's Valuer means any Registered Valuer appointed by Te Runanga to participate in Valuation in accordance with the Valuation Methodology;
Terms of Transfer means the agreement for sale and purchase, in respect of each Settlement Property, set out in Attachment 5.5;
Transfer Value means, in respect of each Settlement Property and subject to the Terms of Transfer, the purchase price to be paid by Te Runanga to the Crown, as determined by the methodology and process, including Valuation and Adjustment, set out in the Valuation Methodology;
Valuation means, in respect of each Potential Property, the valuation process to be carried out and completed in accordance with the Valuation Methodology;
Valuation Date means the date of this Deed;
Valuation Methodology means the methodology and process set out in Attachment 5.4;
Vendor Agency means, in respect of each Property, the Crown Body listed in the fifth column of Attachment 5.1;
Vendor Agency's Valuer means any Registered Valuer appointed by a Vendor Agency to participate in Valuation in accordance with the Valuation Methodology.
5.2 BACKGROUND
5.2.1 Pool of Properties to be selected
Te Runanga and the Crown have, prior to the date of this Deed, identified a pool of properties from which Te Runanga may select the Potential Properties and Settlement Properties.
5.2.2 How Properties are initially selected and valued
Te Runanga and the Crown have agreed on a five stage process for the determination of the Transfer Value of each Settlement Property, as follows:
(a) Stage 1: each Vendor Agency shall disclose to Te Runanga relevant information about each Property which it owns;
(b) Stage 2: each Vendor Agency's Valuer shall provide to Te Runanga a valuation report for each Property which it owns;
(c) Stage 3: Te Runanga shall select Potential Properties (which shall then become subject to Valuation);
(d) Stage 4: Valuation of each Potential Property shall then be carried out in accordance with the Valuation Methodology; and
(e) Stage 5: the value of Potential Properties shall be subject to Adjustment in accordance with the Valuation Methodology.
5.2.3 Final selection
Te Runanga and the Crown have agreed the process by which Te Runanga shall then select Settlement Properties following Valuation and, if applicable, Adjustment and the treatment of Properties and Potential Properties which are not finally selected by Te Runanga.
5.2.4 Terms of Transfer
Te Runanga and the Crown have agreed how Settlement Properties shall then be transferred from each relevant Vendor Agency to Te Runanga (which shall be done in accordance with the Terms of Transfer).
5.3 TRANSFER VALUE AND SELECTION - THE PROCESS STAGE BY STAGE
5.3.1 Disclosure initial selection and Transfer Value - operative clause
Te Runanga and the Crown agree that:
(a) disclosure shall be made to Te Runanga in accordance with paragraphs 1, 2 and 3 of Attachment 5.3;
(b) each Vendor Agency's Valuer shall inspect (and allow Te Runanga's Valuer to join that inspection) and then provide Te Runanga with a valuation report for, each Property owned by that Vendor Agency in accordance with the Valuation Methodology;
(c) selection of the Potential Properties shall take place in accordance with clause 5.4;
(d) Valuation and Adjustment (if applicable) will be carried out and completed in accordance with the Valuation Methodology; and
(e) selection of the Settlement Properties shall take place in accordance with clause 5.5.
Clause 5.3.2 sets out the first stage of that process and clauses 5.3.3 to 5.3.6 are a summary of the other stages of that process.
5.3.2 Stage 1 - Disclosure
No later than the date of inspection notified under paragraph 4.1 of Attachment 5.4 and in respect of all Properties, the Crown shall effect Due Diligence Disclosure. When providing the information the Crown shall, where relevant, specify the date as at which the information is current. Unless otherwise stated, the information shall be as at the date of this Deed.
5.3.3 Stage 2 - Valuation Reports for Properties
Each Vendor Agency's Valuer shall provide to Te Runanga a full valuation report confirming its assessment of the current market value for each Property owned by the relevant Vendor Agency and, in the case of Leaseback Properties, the current market rental for the Property as at the Valuation Date. The valuation report shall comply with the requirements of paragraph 4.3 of the Valuation Methodology and shall be delivered no later than the next Business Day after the expiration of the period of 21 Business Days commencing on the Legislation Date.
5.3.4 Stage 3 - Selection of Potential Properties
After Te Runanga's receipt of the relevant Vendor Agency's Valuer's valuation reports in respect of each Property and no later than the Initial Selection Date, Te Runanga shall:
(a) select the Potential Properties, on an indicative and non-binding basis in accordance with clause 5.4; and
(b) provide to each relevant Vendor Agency and the Crown, in respect of each Potential Property, either:
(i) confirmation that Te Runanga accepts the Vendor Agency's Valuer's valuation report (in which case the assessment of the current market value of the Potential Property and, in the case of Leaseback Properties, the current market rental for the Potential Property set out in that report shall be, respectively and subject to Adjustment and the Terms of Transfer, the Transfer Value and, if applicable, Initial Rental for the Potential Property); or
(ii) a notice rejecting that report, which shall be accompanied by a full valuation report confirming its assessment of the current market value of each Potential Property in respect of which Te Runanga disagrees with the Vendor Agency's Valuer's valuation report and, in the case of Leaseback Properties, its assessment of the current market rental for the Potential Property as at the Valuation Date. This valuation report will comply with the requirements of paragraph 5.1 of the Valuation Methodology.
5.3.5 Stage 4 - Valuation of Potential Properties
As soon as possible, following receipt by the Crown of Te Runanga's notice of selection of the Potential Properties, but no later than the next Business Day after the expiration of the period of 185 Business Days commencing on the Legislation Date, Te Runanga and the Crown shall, in respect of Potential Properties the subject of clause 5.3.4(b)(ii), attempt to agree or have determined in accordance with paragraph 4.6 and paragraphs 5 to 7 of the Valuation Methodology, the current market value and, in the case of Leaseback Properties, current market rental of each Potential Property as at Valuation Date.
5.3.6 Stage 5 - Adjustment
Te Runanga and the Crown shall carry out Adjustment in respect of the Potential Properties in accordance with paragraph 8 of the Valuation Methodology to determine changes, if any, to the Transfer Value attributable to the circumstance or circumstances specified in paragraph 8.2 of the Valuation Methodology.
5.4 SELECTION OF POTENTIAL PROPERTIES
5.4.1 Notice of initial selection
No later than the Initial Selection Date, Te Runanga shall notify the Crown and each relevant Vendor Agency, by reference to the details set out in Attachment 5.1, of each Property which it has selected to have its Transfer Value and, in the case of Leaseback Properties, its Initial Rental, agreed or determined in accordance with the Valuation Methodology.
5.4.2 Consequence of failure to give any notice
If Te Runanga fails to give any notice by the Initial Selection Date, all Properties will be deemed to be Potential Properties.
5.4.3 Treatment of Properties not specified
This section and its Attachments (except clause 5.5.3 and clause 5.8.3) shall cease to apply to each Property which Te Runanga has not specified in any such notice given by the Initial Selection Date.
5.5 SELECTION OF SETTLEMENT PROPERTIES
5.5.1 Notice of final selection
No later than the Final Selection Date, Te Runanga shall notify the Crown and each relevant Vendor Agency, by reference to the details set out in Attachment 5.1, of each Potential Property which it has selected as a Settlement Property.
5.5.2 Consequence of not selecting
This section and its Attachments (except clause 5.5.3 and clause 5.8.3) shall cease to apply to each Potential Property in respect of which Te Runanga fails to give that notice by the Final Selection Date.
5.5.3 RFR continues to apply
All Properties, including Potential Properties, which are not acquired by Te Runanga as Settlement Properties shall still come within the category of assets that are subject to RFR and will still be subject to clause 8.4.
5.6 TRANSFER OF SETTLEMENT PROPERTIES
5.6.1 Transfer and payment
On Completion Date, the Crown shall transfer each Settlement Property to Te Runanga in return for and in consideration of payment by Te Runanga to the Crown of the Transfer Value determined for each Settlement Property (which shall be the current market value of each Settlement Property as at the Valuation Date as agreed or determined by Valuation and subject to Adjustment and the Terms of Transfer).
5.6.2 Leasebacks
In respect of each Leaseback Property, the transfer shall be subject to and with the benefit of a Deed of Lease or registrable Memorandum of Lease to the relevant Vendor Agency or to the Crown on the terms described in Attachments 5.6 to 5.8. The commencement date for each Lease shall be the Completion Date and the rent payable from the commencement date will be the Initial Rental.
5.6.3 Terms of Transfer
The terms and conditions on which each Settlement Property shall be transferred by the Crown to Te Runanga shall be those specified in the Terms of Transfer, which are deemed to be a separate agreement in respect of each Settlement Property.
5.7 VARIATIONS
The provisions of this Section 5 are varied in the manner set out in Attachment 5.9 in respect of the Properties described in that Attachment.
5.8 MANAGEMENT OF THE PROPERTIES
5.8.1 Access to properties
The Crown shall allow Te Runanga's representatives access to the Properties on reasonable notice and at reasonable times of the day to assist Te Runanga in its due diligence, its assessments of Market Value, its decision to select Potential Properties and Settlement Properties and in its decision to notify whether a Potential Property should, in Te Runanga's opinion, be subject to Adjustment.
5.8.2 Notification of material events
The Crown shall notify Te Runanga as soon as the Crown or the relevant Vendor Agency becomes aware of any event affecting Properties which would be reasonably material to a prudent purchaser's decision to purchase a similar property.
5.8.3 Maintenance of Properties
The Crown shall maintain, until the Completion Date, each Property (including buildings, improvements and other fixtures on each Property):
(a) to a standard no worse than that which they were in at the Valuation Date; or
(b) if some lesser standard is recognised in establishing a revised Transfer Value during Adjustment, to a standard no worse than that lesser standard,
fair wear and tear excepted, but in respect of any Property that the Crown or Vendor Agency may sell without Te Runanga's consent in accordance with Section 8, this clause shall not apply with effect from the date on which the Property is transferred by the Vendor Agency as a result of such sale.
5.8.4 Tenancy arrangements
During the period to the Completion Date, the Crown shall, or the Crown shall procure that the relevant Vendor Agency shall:
(a) not approve any assignment or subletting, or renew, grant or vary any Lease (which in this clause has the meaning given to it in the Terms of Transfer) without the prior written consent of Te Runanga. Te Runanga shall not unreasonably or arbitrarily withhold or delay consent where the Vendor Agency is obliged to give approval or to renew, grant or vary any Lease under the provisions of any Lease;
(b) negotiate any rent review or rent payable on any renewal of Lease to obtain the best rent reasonably obtainable under the Lease. The Crown shall not agree to the rent payable on a review or renewal of Lease without first obtaining the written consent of Te Runanga. Te Runanga shall not unreasonably or arbitrarily withhold or delay consent and shall not withhold consent where the rent proposed is supported by a report obtained by the Vendor Agency from an independent registered valuer; and
(c) keep Te Runanga fully informed as to any legal proceeding or arbitration threatened or commenced by the Vendor Agency, or by any party against the Vendor Agency, in any matter relating to the Property, and shall take steps to commence or continue any such proceedings or arbitration in good faith.
5.8.5 Crown indemnity
The Crown shall indemnify Te Runanga against any costs, charges, expenses, damages and liability as a result of any action, claim or demand arising out of any breach by the Crown of its obligations under clause 5.8.4.
5.9 FURTHER PROVISIONS
5.9.1 Requests for further information
At any time before Completion Date (or later if the Crown has not complied with its obligations under clause 5.6), Te Runanga may require from the Crown or the relevant Vendor Agency any information concerning Properties, that is additional to that already provided and not available to the public and which Te Runanga reasonably requires for it to make the decisions or selections contemplated by this Section. If the Crown or the relevant Vendor Agency possesses or can reasonably procure such additional information then the Crown shall provide to Te Runanga, or allow Te Runanga to inspect, such additional information in a timely manner.
5.9.2 Use of information
All information provided by the Crown or the relevant Vendor Agency to Te Runanga at any time under this Section shall be used by Te Runanga and its advisers only for the purposes contemplated by this Deed and for no other purpose.
5.9.3 Confidentiality
Where the Crown or relevant Vendor Agency is unable to provide to Te Runanga information under this Section without any further reasonable assurances of confidentiality in favour of the Crown or the relevant Vendor Agency or any other third parties, then Te Runanga and its advisers shall provide the required reasonable assurances. Such assurances shall not preclude disclosure by Te Runanga of such information to any other person which has itself given assurances to the same effect as Te Runanga's assurances, unless the Crown reasonably objects to such person and the Crown has given notice to that effect to Te Runanga.
5.9.4 Crown's covenant regarding information
The Crown covenants and warrants to Te Runanga that all details, forecasts, projections, estimates, opinions and other information provided by the Crown to Te Runanga pursuant to clause 5.3.2 or clause 5.9.1 shall:
(a) be the best information available to the Crown or the relevant Vendor Agency at the time of provision; and
(b) genuinely represent the views of the Crown or the relevant Vendor Agency and be reasonably arrived at on the basis of the best information available to them at the relevant date.
5.9.5 Disclaimer
Te Runanga acknowledges and agrees that:
(a) other than those set out in clause 5.9.4, no representation or warranty is given, whether expressed or implied, nor is any responsibility accepted by, the Crown or the relevant Vendor Agency with respect to the completeness or accuracy of the information provided by the Crown to Te Runanga pursuant to clause 5.3.2 or clause 5.9.1; and
(b) other than those set out in clause 5.9.4, no representation or warranty is given, whether expressed or implied, nor is any responsibility accepted by, the Crown or the relevant Vendor Agency with respect to Te Runanga's reliance upon or use of the details, forecasts, projections, estimates, opinions and other information.
5.9.6 Crown primarily liable
Where, in this Section or any of its Attachments, an obligation is imposed on, or an action may be taken by, the Crown, the Crown shall either satisfy that obligation itself or procure the relevant Vendor Agency to comply with that obligation or allow the relevant Vendor Agency to take that action. Conversely, where an obligation is expressed to be imposed on the Vendor Agency, or an action is to be taken by the Vendor Agency, the Crown shall also be liable for that obligation or may also take that action.
5.9.7 Unconditional obligations
Clause 17.1 (which provides that this Deed is conditional on the Settlement Legislation coming into force) does not apply to clause 5.8 or those parts of Due Diligence Disclosure and the Valuation Methodology which require performance or action to be taken before the Legislation Date.
5.9.8 Errors and misdescriptions
The legal description of the Properties in Attachments 5.1 and 5.2 is believed to be correct. If it is established that any error, misdescription or other inconsistency has occurred or exists, the Crown's obligation shall be limited to correcting the error, misdescription or other inconsistency.
5.3 TRANSFER VALUE AND SELECTION - THE PROCESS STAGE BY STAGE
5.4 SELECTION OF POTENTIAL PROPERTIES
5.5 SELECTION OF SETTLEMENT PROPERTIES
5.6 TRANSFER OF SETTLEMENT PROPERTIES
5.8 MANAGEMENT OF THE PROPERTIES
ATTACHMENT 5.2 LEASEBACK PROPERTIES
ATTACHMENT 5.3 DUE DILIGENCE DISCLOSURE
ATTACHMENT 5.4 VALUATION METHODOLOGY
ATTACHMENT 5.5 TERMS OF TRANSFER
ATTACHMENT 5.8 NZ POST LEASES>
ATTACHMENT 5.9 VARIATIONS TO SECTION 5 IN RESPECT OF CERTAIN PROPERTIES
