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Disaster Relief

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Small business, not-for-profits and farming

My business was impacted by a natural disaster and now I can’t deliver or receive goods. What should I do?

First, check the contracts you have with your customers or suppliers. Look for any “force majeure” clauses in these contracts. A “force majeure” is a part of a contract that relieves you of your obligations if events outside of your control prevent you from carrying out the contract, like flooding.  However, this clause will only apply if it’s specifically mentioned in the contract. To see if you have a “force majeure” clause in the contract, your contract may define what “force majeure” means and will often refer to the floods or an “Act of God”. 

If your contract has a “force majeure” clause, you generally won’t have to fulfil your obligations under the contract. This will be for so long as the flood (for example) prevents you from doing so (or in some cases, for a specific time). This means you will not be in breach of the contract.   

On the other hand, if you can still carry out your obligations under the contract despite the flood, then it’s unlikely to be considered a “force majeure” event, and you’ll have to continue with your obligations. 

Sometimes a force majeure clause states that you must be ‘prevented’ from performing its obligations. In this case, it has to be physically or legally impossible to perform your obligations. If there are other ways to perform the contract, even if they are expensive ways, then you won’t be able to rely on the “force majeure” clause.  

What if there is no “force majeure” clause?

If the contract has no “force majeure” clause, then you may be able to rely on a legal concept known as “frustration”.  This applies in situations where a ‘frustrating’ event has made it impossible to perform the contract.  However, it is a lot harder to claim contractual relief for frustration, so it’s best to seek legal advice before pursuing this route. 

You should also read your insurance and check whether you are covered for Business Interruption insurance. Business Interruption insurance typically covers loss you have suffered due to your business being interrupted by the event. This could include any costs you had to pay, such as wages, while your business could not operate. 

To claim under Business Interruption insurance, you should take steps to minimise your loss. If it is still possible for your business to stay open even though your turnover will be reduced, you should try to do this. If you don’t consider this is worthwhile, discuss this with your insurance company before closing. 

Keep records of what your reduced revenue and costs were during this time. 

Gather evidence of what your revenue and turnover was likely to be. The best evidence of this is likely to be what it was the month before the flood and possibly at the same time last year. Your accountant should be able to help you with this. It is likely that your policy will cover you for this cost and it is worthwhile providing the best evidence you can for your claim. 

The goods I had in stock have been destroyed by flooding. What should I do?

Check your insurance: 

  • Contact your contents insurer 
  • If you took out insurance to help you make your repayments, check the terms and get in contact with your insurer or insurance broker 

If you bought the goods with money provided by a bank or other lender, then you should contact the lender: 

  • You may be able to make a “Hardship Application” with the bank or lender under the Credit Contracts and Consumer Finance Act (“CCCF Act“) for being unable to make debt repayments. You would have to show that you meet the following criteria: 
  • you have suffered a hardship you couldn’t reasonably have seen coming (the negative effect of the cyclone / floods should be enough); 
  • as a result of that hardship, you cannot reasonably make your debt repayments; and 
  • you believe that you would be able to make your debt repayments if the contract was changed in the ways set out in the CCCF Act, which are: 
    1. extending the contract term and reducing the amount of each payment owed under the contract; 
    2. postponing the payment due dates under the contract; or
    3. a combination of 1) and 2). 

Are there any relief packages for small businesses impacted by the flooding?

Small businesses, orchards, and farms significantly impacted by Cyclone Gabrielle are still eligible to apply for financial support through the loan guarantee scheme. This includes businesses in Northland, Auckland, Waikato, Bay of Plenty, Tairāwhiti, Hawke’s Bay, Tararua, and Wairarapa.

The loan guarantee scheme is available until June 2024. It lets commercial lenders (like banks) provide loans with more favourable terms to highly affected businesses — for example, by offering reduced interest rates.

The scheme is administered by the New Zealand Export Credit Office. For more information, see the guidance on the Treasury website, here.

You should also check what insurance policies you have, and whether they apply to damage or loss caused by the cyclone or flooding.

For more information about support that was available before September 2023, see the guidance on the MPI website, here.

I rely on another business to supply me with goods or services, and they can’t supply me at the moment.  What can I do?

If you rely on someone to supply products to your business, see if your contract allows you to use another supplier. Look at your contract with your current supplier and see whether this is an “exclusive” arrangement.   

A supply contract is “exclusive” if the contract states that it is an “exclusive arrangement between the parties” (or something similar). 

If a supply contract specifically says that the contract: 

  • “does not” constitute an exclusive arrangement; or  
  • is a “non-exclusive arrangement between the parties”; or  
  • does not say if it is an exclusive or non-exclusive contract, 

then the contract will likely NOT be an exclusive arrangement. If you have a non-exclusive arrangement with your supplier, you are free to find another supplier.  However, entering multiple supply agreements could be costly once your original supplier can provide the goods and services contracted for. 

What if I have an “exclusive arrangement” with my supplier?

If you have an exclusive arrangement with your supplier, then you may not be allowed to use another supplier despite your current supplier being unable to provide the goods and services. 

If your contract is for an exclusive arrangement, you may still be able to use another supplier: 

  • you can look to cancel the contract on the basis of non-performance or “force majeure”, for the definition of “force majeure” see: “My business was impacted by flooding and now I can’t deliver or receive goods. What should I do?” above. The non-performing party would be at fault. Once an exclusive arrangement is cancelled, you are free to contract with another supplier; or 
  • you can negotiate with your supplier to ‘waive their exclusivity’. This would allow you to contract with someone else.  Make sure this waiver is in writing.  It should also be signed and dated by the supplier. 

How do I support employees who are unable to work due to impacts of the flood?

Contact your employees. It is important to remember that employers and employees owe each other a duty of ‘good faith’. This means both you and your employee must be responsive and communicative with each other, and not act in a misleading or deceptive way. 

Before making any decisions that could affect your employee, you must follow a proper consultation process. This is where you and your employee meet and talk about a possible decision before it is made. If you are thinking about ending an employment, you must first give the reasons why and all other relevant information, and allow your employee to provide feedback.  

Employers might be able to receive payments from the government to help them recover after Cyclone Gabrielle. You will need to meet certain criteria to receive support, such as abiding by employment law and giving proper care and concern to your employees. Look at the grants available above to see if your business is eligible for this support. 

For more information, see: “Employment. 

How do I decide if my worksite is safe enough for employees to return to work?  Are there risks to me if there are further slips or damage?

As an employer, you are primarily responsible for your employee’s health and safety at work. Whether or not the workplace is safe to return to will depend on different factors such as how badly and in what way the workplace was affected by flooding. 

You need to consider wider infrastructure issues (e.g. road closures, power outages or water restrictions) and the impact of these on your staff getting to and from work and whether you can be flexible.  

If you need to report any flood problems (with buildings) or request a building assessment, call 0800 22 22 00.  When an assessment is done, you will receive a placard showing whether it is safe to enter the premises: 

  • A red placard means re-entry is prohibited because the building is no longer safe. 
  • A yellow placard means assessors have concerns about the building and have restricted entry to part of the building or have allowed temporary use of the building. 
  • White placards means the property may have minor damage but is sufficiently safe. 

You should contact the owner of the building to see whether the building is safe to return to because the owner will have to inspect the safety of the building. 

Help and support with cleanup and supplies to your business:

If you are an affected farmer or grower then you can contact: 

  • The Rural Support Trust – call 0800 787 254 or visit www.rural-support.org.nz. 
  • Horticulture New Zealand – fruit and vegetable growers 0508 467 869 or Andrew Bristol 021 0216 2021 
  • Federated Farmers Gisborne / Wairoa – Toby Williams 06 868 8996 
  • Councillor Sandra Faulkner – 021 529 041 (Chair of Tairāwhiti Rural Coordination Group) 

Farmers needing expert feed support to do a feed plan, to source supplementary feed, or who are looking for other assistance with their livestock, should contact their levy body or Federated Farmers: 

  • Federated Farmers – 0800 327 646 
  • Beef + Lamb New Zealand – 0800 233 352 
  • DairyNZ – 0800 432 479 69 

I need temporary workers to help rebuild my business – are there special visa categories available?

The Recovery Visa (a Specific Purpose Work Visa), can allow employers to sponsor migrants to come to New Zealand for a specific event or purpose, such as working on an emergency response. 

The initial visa will last up to 6 months. The $700 fee will be refunded for successful applicants. 

Visit: www.immigration.govt.nz/employ-migrants/hiring-a-migrant/recovery-visa for more information.  

What do I do if I can’t supply milk to my co-operative?

If milk production has stopped and this is likely to continue for 60 days or more (this period applies to Federated Farmers contracts, and may be different in different agreements), it is likely that the milk supply contract with your processor will include a “force majeure” provision which may be relied upon to terminate the contract, or relieve you of supply obligations. Usually, there are no minimum supply requirements (but an obligation to supply all or a significant proportion of milk) so the fact that you cannot supply milk due to the Cyclone is likely not an issue. 

For more information on force majeure clauses, see: “My business was impacted by flooding and now I can’t deliver or receive goods. What should I do?”.  

Check SCC tolerances (one indicator of the quality of milk) with your dairy company: 

  • In emergencies, dairy companies are usually able to accept milk with higher cell counts. Fonterra for example will not penalise suppliers if SCCs are high in the first two consignments after an extreme weather event. Contact your area manager, field representative or service centre. 
  • Contact your area manager or field representative, as they may be able to compensate you or provide you with specific assistance, if you have been forced to dump milk or are unable to supply milk due to the cyclone.  

As always, seek legal advice, have conversations early, keep a record of the conversation in writing (minutes and email) and consult expert advice at every stage. If you are a Federated Farmers member, you can use the 0800 legal service to discuss your options further. 

For more information see www.dairynz.co.nz/business/adverse-events/cyclone-response.

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