Appendix:

Further notes on the ADLS Agreement

1. We spoke to two practitioners with experience in the drafting of the ADLS agreement and relevant processes to better understand how the agreement came about, how it is drafted, how it is amended, what public input is possible, and its relative benefits and shortcomings.¹

1. Our key insights are recorded below and any errors are attributable to the authors.

   1. The Agreement has been in use since the 1960s or 70s. It is now in its tenth edition. One of the early versions of the Agreement was only six pages long. It was limited to six pages because it was printed on specific paper imported from the United Kingdom, because of the way it could be folded. Over time, the agreement has had to account for a wider number of legal instruments and greater prescriptiveness in dealing with the rights and obligations of the parties.
   2. The Agreement draws on a wide range of primary legal sources. It is not only a reflection of land law, but also taxation law (in the way that GST is incorporated into land sales).
   3. The Agreement is produced by the Auckland District Law Society, not the New Zealand Law Society. The ADLS is the sole remaining regional law society after a period of consolidation, although it has members from across New Zealand and is not limited to the Auckland region. The NZLS has regulatory functions, whereas the ADLS does not.
   4. The ADLS agreement was originally drafted only by the ADLS. Subsequently, the Real Estate Institute of New Zealand became involved in the production of the agreement based on the experiences of its members and its members’ interests in a useful document. This partnership – between various non-government organisations – is notable because it could be emulated for interpretation-as-code instruments.
   5. When interviewees were asked why anyone treats the agreement as being legally reliable, they pointed to the reputation and qualifications of the members of the committee. They also emphasised that the agreement has been reviewed judicially in disputes between parties to a transaction over the years. We draw special attention to this for the light it casts on the role the courts must have in rendering coded instruments reliable. Again we state: there is no substitute for the generative process of legal dispute, which is the only pathway to an authoritative judicial interpretation.
   6. The Agreement is subject to copyright jointly held by REINZ and ADLS. The copyright is enforced. It is not clear how the revenues generated by this copyright interest are used, but members of the Real Estate Institute of New Zealand gain access through their membership in the Institute.
   7. Copyright in this case is an essential legal device for controlling how the agreement is used or modified. It is used to ensure that the utility of the standard form is not undermined. As noted above, utility is derived primarily from widespread agreement that the committee with oversight of the Agreement is exceptionally qualified and endorse all of its contents. We note that there was a case recently where a real estate agent used software to illegitimately modify the terms of the copyright agreement in a way that was not obvious to other parties to the transaction. The modification was only noticed by a lawyer shortly before the agreement was signed and led to disciplinary consequences for the agent.
   8. The ADLS publishes software that facilitates legitimate amendment of digital versions of the Agreement. This software replicates the way amendment would occur with a paper copy. In other words, an amended term is struck through with a line and the revised text is included alongside the original text. This makes it obvious to the reader when the original document has been amended.
   9. The core benefit of the Agreement is that it makes it possible for users (including lawyers representing clients) to immediately know the contents of the agreement being contemplated by the parties. This saves time for the practitioner, and money for the client. It also allows bodies of practice and expertise to be developed around that specific agreement, including seminars and lectures, or commercial products. The predictability of the agreement also flows through into organisational workflows in legal practice.
   10. Around 2008-2009, REINZ formed the view that the Agreement could be improved by re-drafting it using plain language drafting techniques. The intent was that non-lawyers would have a better understanding of the Agreement. There have been similar attempts over the years to produce a plain language version of the Agreement. Ultimately, even where they have been completed, the plain language re-drafts have never been widely adopted. Interviewees also noted that there had been some suggestion that the fundamental general clauses in the Agreement could be adopted or acknowledged in legislation. This has not been pursued.
   11. The Agreement includes its own dispute resolution mechanism. Parties who agree there is a dispute can refer it to experienced property lawyers for resolution. This mechanism is designed to allow property transactions to settle without parties relinquishing their rights to pursue a remedy for any breach, and to resolve disputes without litigation. It reflects the complex transactional environment in which the Agreement is used, where chains of transactions might settle all at once, and a disruption in one of these may affect the ability for settlement to occur on a wholly unrelated transaction.
   12. The Agreement is updated and amended according to the procedures of the Committee. The Committee periodically seeks input from members of the profession and the public. There have been instances where members of the public or their legal representatives have suggested issues caused by the Agreement, or improvements for subsequent editions. Academic members of the committee have also produced papers on proposed revisions to the agreement. REINZ also has input based on the experience of its members in using the agreement.

2. We also note that conveyancers have status as a separate class of professionals who, along with lawyers, can effect changes to the title of land in New Zealand’s land registration system. It is interesting to consider how predictable coded interpretations of the law might enhance the ability of non-lawyers to become specialists in legal tasks traditionally reserved for legal practitioners.

3. We also note that no individual or agency carries any legal liability for the accuracy of the document. The responsibility for providing legal advice and meeting client obligations still lies with legal practitioners. Any person who transacts using the Agreement without taking legal advice risks contractual dispute. Equally, it is possible for additional clauses to be added to the agreement that might do undermine the integrity of the agreement as a whole: for example, an additional clause might contravene one of the standard clauses in a way that does not clearly indicate how that inconsistency should be resolved.

Summary

1. Our primary interest in the ADLS Agreement is that it illustrates the wider value of exceptionally reliable reproducible legal instruments, which nevertheless are only non-authoritative interpretations of how the law works. Parties attempting to create law as code models should pay particular attention to the following points, which we believe are integral to the success of the ADLS Agreement:

   1. The Agreement is drafted in natural language, but it reflects a workable operational interpretation of multiple legal instruments that increases the parties’ compliance with and knowledge of the law.
   2. There is wide confidence in the reliability of the Agreement because of the way that it is produced and because of the qualifications of the people who produce it and monitor it.
   3. The Agreement is capable of being assessed by the judiciary and updated to reflect statutory amendment, judicial interpretation and the impact of case law.
   4. It would be possible for the Agreement to be modelled in computational languages and used, while still preserving the natural language text in case of any interpretive disagreement.
   5. A coded model may not be immediately useful for the people who use it, but a similar process to produce the natural language text would confer credibility on the associated coded model produced. The Committee could use a better rules approach to improve the suitability of its drafting for encoding in digital systems.

2. The Agreement creates a reliable and dependable legal environment within which parties can transact. It does not exhaustively state the law, nor is it held up as having greater authority than the other primary legal sources (or even secondary legal sources in the form of academic commentary) that inform its drafting. It is reproducible and scalable in the way that many copies of it can be produced and used rapidly.

3. Though noteworthy for its effectiveness and widespread adoption, the Agreement is only one example of legal ‘models’ in current use. There are a range of other, similar devices for use in legal context, including government-authored forms like the standard residential tenancies agreement produced by tenancy services. We were informed that the Drafting and Precedents Committee of the ADLS has developed proficiency in drafting standard form legal agreements in the same way that we imagine better rules practitioners would develop greater expertise over time.

4. There is a competing standard form commercial lease agreement produced by the Property Council. This illustrates the way that differing legal interpretations can be codified in different ways for different groups, depending on their interests and the operational context of the instrument.

5. There is some recognition that the way such standard form agreements have been drafted leads to a particular balance of power in a legal relationship: specifically, the ADLS lease was perceived in the past to have favoured landlords’ interests to a greater extent than tenants’ interests.