Guarantees and indemnities (continued)
Housing New Zealand Corporation (HNZC)
HNZC is liable to the owners (ANZ National Bank Limited, Ichthus Limited and Westpac Banking Corporation) of mortgages sold by HNZC during 1992 to 1999 for credit losses they may incur from specified limited aspects of their ownership of those mortgages with the Crown standing behind this obligation.
The Crown has provided a warranty in respect of title to the assets transferred to Housing New Zealand Limited (HNZL) (HNZL was incorporated into the HNZC Group as a subsidiary in 2001 as part of a legislated consolidation of government housing functions) and has indemnified HNZL against any breach of this warranty. In addition, the Crown has indemnified HNZL against any third-party claims that are a result of acts or omissions prior to 1 November 1992. It has also indemnified the directors and officers of HNZL against any liability consequent upon the assets not complying with statutory requirements, provided it is taking steps to rectify any non-compliance.
Indemnities against acts of war and terrorism
The Crown has indemnified Air New Zealand against claims arising from acts of war and terrorism that cannot be met from insurance, up to a limit of US$1 billion in respect of any one claim.
Justices of the Peace, Community Magistrates and Disputes Tribunal Referees
Section 197 of the Summary Proceedings Act 1957 requires the Crown to indemnify Justices of the Peace and Community Magistrates against damages or costs awarded against them as a result of them exceeding their jurisdiction, provided a High Court Judge certifies that they have exceeded their jurisdiction in good faith and ought to be indemnified.
Section 58 of the Disputes Tribunal Act 1988 confers a similar indemnity on Disputes Tribunal Referees.
Landcorp Farming Limited
The Protected Land Agreement provides that the Crown will pay Landcorp any accumulated capital costs and accumulated losses or Landcorp will pay the Crown any accumulated profit, attributed to a Protected Land property that is required to be transferred to the Crown or that the Crown releases for sale. The Crown will also be liable to pay Landcorp, at the time of sale or transfer of any property deemed to be Protected Land, the amount of any outstanding equity payments on the initial value of the property.
Maui Partners
The Crown has entered into confidentiality agreements with the Maui Partners in relation to the provision of gas reserves information. The deed contains an indemnity against any losses arising from a breach of the deed.
National Provident Fund
The National Provident Fund (NPF) has been indemnified for certain potential tax liabilities. Under the NPF Restructuring Act 1990, the Crown guarantees:
- the benefits payable by all NPF schemes (section 60)
- investments and interest thereon deposited with the NPF Board prior to 1 April 1991 (section 61), and
- payment to certain NPF defined contribution schemes where application of the 4% minimum earnings rate causes any deficiency or increased deficiencies in reserves to arise (section 72).
A provision has been made in these financial statements in respect of the actuarially assessed deficit in the DBP Annuitants' Scheme.
New Zealand Railways Corporation (NZRC)
The Crown has indemnified the directors of NZRC against any liability arising from the surrender of the licence and lease of the Auckland rail corridor.
The Crown has further indemnified the directors of NZRC against all liabilities in connection with the corporation taking ownership and/or responsibility for the national rail network and any associated assets and liabilities on 1 September 2004.
On 5 July 2009 the Crown further indemnified the directors of NZRC, and the directors of its subsidiaries, to the same extent that statutory entities can indemnify their members under the Crown Entities Act 2004. This indemnity was given on the grounds that there is no express power in the New Zealand Railways Corporation Act 1981 for New Zealand Railways Corporation to grant its own indemnities.
Section 10 of the Finance Act 1990 guarantees all loan and swap obligations of the NZRC.
Persons exercising investigating powers
Section 63 of the Corporations (Investigation and Management) Act 1989 indemnifies the Securities Commission, the Registrar and Deputy Registrar of Companies, members of advising committees within the Act, every statutory manager of a corporation and persons appointed pursuant to sections 17 to 19 of the Act, in the exercise of investigating powers, unless the power has been exercised in bad faith.
Public Trust
Section 52 of the Public Trust Act 2001 provides for the Crown to meet any deficiency in the Public Trust's Common Fund in meeting lawful claims on the Fund. This is a permanent (legislated) liability. On 7 November 2008 the Minister of Finance guaranteed interest payable on estates whose money constitutes the Common Fund.
Reserve Bank of New Zealand
Section 21(2) of the Reserve Bank of New Zealand Act 1989 requires the Crown to pay the Reserve Bank the amount of any exchange losses incurred by the bank as a result of dealing in foreign exchange under sections 17 and 18 of the Act. This is a permanent (legislated) liability.
Synfuels-Waitara outfall indemnity
As part of the 1990 sale of the Synfuels plant and operations to New Zealand Liquid Fuels Investment Limited (NZLFI), the Crown transferred to NZLFI the benefit and obligation of a Deed of Indemnity between the Crown and Borthwick-CWS Limited (and subsequent owners) in respect of the Waitara effluent transfer line that was laid across the Waitara meat processing plant site.
The Crown has the benefit of a counter indemnity from NZLFI that has since been transferred to Methanex Motunui Limited.
Tainui Corporation
Several leases of Tainui land at Huntly and Meremere have been transferred from ECNZ to Genesis Power Limited. The Crown has provided guarantees to Tainui Corporation relating to Genesis Power's obligations under the lease agreements.
