The purpose of the Consumer Guarantees Act 1993 (the “Act”), is to protect the interests of consumers while balancing the rights of businesses and consumers. The Act provides consumers with certain guarantees when buying goods and services from a supplier together with the right to claim some form of compensation from suppliers and manufacturers if the goods and services fail to comply with guarantees within the Act. The purpose of the Act (as stated at s1A of the Act) was introduced as a result of the consumer law reform in 2013. This article outlines the key areas of the Act with specific reference to suppliers and consumers.
 
The Act outlines certain guarantees that suppliers must provide to consumers when exchanging domestic goods (second-hand or new) and services. These guarantees include that (but are not limited to):

• Where goods are to be delivered to a consumer by the supplier, the supplier guarantees that the goods will be received by the consumer within a reasonable time or at the time agreed between the parties.
• The goods are of an acceptable quality.
  • Acceptable quality” provides that the goods:
    • Are safe and durable.
    • Are fit for all purposes for which they are commonly used.
    • Match their advertised description.
    • Are reasonably priced.
    • Are free from minor defects.
    • Are acceptable in appearance and finish.
• With regards to services, suppliers guarantee that the services provided are:
  • Completed within a reasonable time.
  • Reasonably priced (if the price is not already agreed).
  • Carried out with reasonable skill and care.
  • Fit for the particular purpose.

 
The Act allows consumers to seek repairs, refunds or replacements where the above guarantees are not followed by a supplier. However, the supplier or business has the right to decide which of the above remedies it will provide a consumer, which will largely depend on the circumstances of the claim.
 
It is important to note that the Act does not apply to goods normally bought for commercial business use; i.e. to trade, re-supply or use in the ordinary course of business. The Act covers goods and services generally used for domestic and personal purposes. Where businesses are purchasing domestic goods for use at the business premises, such as desks or telephones for example, they can agree that the Act does not apply. However, to contract out of the Act for this purpose, the businesses must record this in writing. Businesses that sell consumer goods and services cannot contract out of the Act unless the above exemption applies.
 
The Act also does not apply to private transactions, so where you are involved in a private deal, it is important that thorough due diligence investigations are conducted before engaging the services or purchasing goods from a private seller.
 
The following government website https://www.consumerprotection.govt.nz/general-help/consumer-laws/consumer-guarantees-act/ is a great tool to gain further information about your rights and obligations under the Act as either a consumer, supplier or manufacturer. If you do own a business, it may be worthwhile to review the terms and conditions of trade with your lawyer. If you have any other concerns or queries about how the Act applies to you, we suggest getting in touch with your lawyer for further guidance.

COVID-19 – Alert Level 4 – lease obligations and landlord/ tenant discussions
This is a brief note, but should be useful when discussing with your landlord, tenant and/or lawyer depending on your situation.

As with many businesses in New Zealand who are forced to shut their doors, rent and outgoings during the shutdown period must generally be paid unless there are specific provisions in the lease or agreement reached between landlord and tenant can be reached.

Your lease is specific to your premises, although there are some widely used forms of lease documents, such as the ADLS Lease. Many of those standard form leases are adapted and changes negotiated. I strongly recommend that you consult with your legal adviser to ensure you understand the terms of your lease as you progress negotiations with your landlord. I have however, put together some general information relevant to the current circumstances and common clauses in leases to ensure you are better informed and prepared for discussions with your landlord or your tenant depending on which side you fall.

General comments

• Tenants of non-essential businesses who have a standard ADLS Sixth Edition form lease (from 2012 onwards) which includes clause 27.5 (see below) will generally be entitled to an abatement of a fair proportion of rent and outgoings if they are forced to close.
• Tenants of non-essential businesses who are on older form ADLS leases (Fifth Edition and before), or who are on other forms of leases without a clause similar to 27.5 will generally not be entitled to an abatement of rent and outgoings if they are forced to close.
• Landlords whose tenants are entitled to an abatement of rent generally will not be entitled to claim for loss of rents insurance cover, because there has been no material damage event to trigger that cover.

The idea is fair abatement and not a blanket period for eg. 3 months etc unless the situation is such that it justifies etc.  It will depend also on the situation and tenants business.  The tenant may go out of business if the impact is material so the parties may need to be practical as well.  You may also ask for evidence or need to provide evidence and copies of contracts or emails showing how the business is impacted (including finance statements for comparable periods) prior to any agreement between the parties.

As a tenant, you may approach your landlord to negotiate a fair rental adjustment during the lockdown period - you are not able to access your premises for business.  I understand tenants are receiving rebates of up to 50% rental reduction for between 2-3 months for the months of April, May and June for now for instance.  There is no blanket rule and both parties may need to be practical and sensible about these matters whilst the Alert Level 4 applies.

Further useful information and links during the Covid-19 lock down period:-

- https://www.justice.govt.nz/about/news-and-media/covid-19-news/commercial-property-guidance-for-lawyers-during-covid-19

-         https://www.belong.org.nz/covid19-resources

In light of recent events like the Christchurch earthquakes, and the Australian bushfires and flooding, it really does hammer home the importance of having insurance in place for your residential and commercial properties. As lawyers, we see the repercussions for clients who face the devastating reality that they were not sufficiently insured for such events.

Not many people are aware that specified insurance can be required in areas of high risk of natural disasters. In particular, in areas such as Christchurch, we see an increased requirement from lenders that the insurance provider has earthquake cover specifically noted on the policy, as natural disaster cover is not specific enough. Furthermore, provisions can be made in the sale and purchase of homes for the potential to assign any Earth Quake Commission (“EQC”) claims or ongoing works applicable to that home. Thus, providing the benefit of a claim to the purchaser.

If you own private insurance that includes fire cover, when a natural disaster strikes you can also be entitled to insurance cover under an EQC claim. As of 1 July 2019, EQC has increased its coverage from $100,000 plus GST to $150,000 plus GST in accordance with the 2019 amendments to the Earthquake Commission Act 1993 (“the Act”). As of July 2020, the Act will also seek to phase out any EQC cover for contents damage as a result of natural disaster. The Act has instead allowed for the increase in the total house cover, as noted above. For those without private insurance though, this option is not available.
As part of the 2019 changes to the Act, we have also seen an extension of the time frames for someone to make a claim, whereby as of February 2019, a claim may be lodged within two years of any incident, as opposed to the previous two-month period.

It must also be noted that an EQC claim can be limited in its scope, whereby a private insurer will need to pick up some of the other costs. Most insurers include this as an excess in your insurance policy, but it can cover damages to items such as the driveway, swimming pool and fences which an EQC claim will not cover.

As the saying goes, “you don’t know you need it, until you need it”, it is much the same for insurance. As most home owners in NZ have lending over their property, they will already have some form of insurance coverage to protect them as a requirement of their lenders. However, the vulnerable can be those who own their homes outright and are not necessarily required to hold insurance.

If we can take anything from the devastating disasters like the Christchurch earthquakes and bushfires in Australia, a natural disaster can be unpredictable and devastating in nature. Ensuring that not only do you have cover for the property in question, but you are also confirming that you will be entitled to further EQC cover, is a vital move for any home owner or business owner to minimise the impact of a disaster.
​
We would always suggest that insurance is a vital consideration of owning any property or home. In particular, if you live in an area that is known to be at risk of a natural disaster then the idea of insurance and potentially choosing further natural disaster add-ons to your insurance policy should be a very serious consideration.

When trustees act for a discretionary trust, they have a primary duty to act for, and in the best interest of the beneficiaries. Consequently, any benefit received under the trust is provided at the discretion of those trustees.
Trustees of a discretionary trust have a wide-ranging scope of power in terms of the decisions they make for the trust, with a limited liability for such decisions. However, beneficiaries do also have rights under law to monitor the trust/trustees.
Generally, a discretionary beneficiary has the right to:
• request from the trust or its representatives, documentation for the trust (i.e. trust deeds, appointment/removal of trustee documents, details of trust distributions, trust accounts, trustee contact details and details of trust assets and liabilities);
• receive fair treatment from trustees;
• be considered in any decision made by the trustees;
• seek the court to remove a trustee; and
• apply to the court for intervention or assistance.
The ability for a discretionary beneficiary to request and obtain trust information is an important right and can be where disputes arise. It is important for beneficiaries (especially if you have only just found out you are a beneficiary) to understand what exactly the trust assets and liabilities are, who the trustees are if you want to contact them, and potential history of the trust and trustees. Whilst the request for this information can ruffle the feathers of some trustees, and trustees have been known to deny requests (see the recent case of Erceg v Erceg), the underlining fact remains that the trustee’s role is to act for the beneficiaries benefit above all.
Discretionary beneficiaries can request, but may not be entitled to receive the reasoning behind trustee decisions. This is to protect the role of the trustee and the trust that is placed in them when the trust was established. However, the court can intervene if an explanation is considered justified.
If a trustee is thought to be acting contrary to the benefit of the discretionary beneficiaries or is refusing to provide information to the beneficiaries, then the beneficiaries can apply to the court to have such information released and potentially have the trustee removed or replaced.
Given that there is no requirement for anyone to inform you that you are a discretionary beneficiary of a trust, sometimes trusts can be wound up before you are made aware. Where this occurs, a beneficiary can request provision of information relating to the winding up and final distributions of the trust to see how the assets and liabilities were distributed.
Under section 68 of the Trustee Act 1956, a trust beneficiary can apply to the court to review a decision or act performed by the trustees if they feel that they have reasonable grounds for being aggrieved by the act or omission. Whether a discretionary beneficiary can apply under this act is not yet set in stone, however, decisions by the court point to the idea that if the number of discretionary beneficiaries is small, it may be permissible.
If you are a discretionary beneficiary and unsure of your rights, it is advisable to contact a legal professional to talk you through this.​

The Residential Tenancies Amendment Act 2010 came into force on 1 July 2016.  

Please see the following for a good summary:- https://www.tenancy.govt.nz/about-tenancy-services/news/law-changes-to-the-residential-tenancies-act-now-in-force/

The Act makes tenants and their guests liable for up to four weeks' rent, or the cost of the landlord's insurance excess (whichever is lower), for careless damage caused to a rental property.  Please see:-  https://www.msn.com/en-nz/money/finance/renters-causing-careless-damage-could-be-up-for-a-months-rent/ar-AAH0Xti?ocid=spartandhp

Insurance is absolutely crucial, and when borrowing from lenders to complete a house purchase, it is compulsory. Lenders will not allow a loan draw-down without written confirmation that appropriate and sufficient insurance cover is in place.  The cover has to be in your full legal name or joint names if the property is owned jointly.

Usually there is replacement insurance relating to fire, earthquake and other damage. Cover for contents go hand in hand with the replacement cover but is not compulsory. Highly recommended though!

These days you really need a valuation of the home being purchased to set the correct and allowable amount of cover to be sought. Banks and other lenders insist on this and then check the numbers in respect of what they are lending in dollar terms against the potential insurance pay-out in the event of damage to your house.

Replacement cover gives all the answers. The lender wants to know its lending is secure, and your house has the ability to be rebuilt at best while covering the amount they have lent at worst.

While fire and willful damage are the cornerstone of insurance cover and why it is vitally important, these days earthquake risk is also on everyone’s minds and must be included when arranging such cover