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Moving into the final weeks of 2021, the traditions we’re used to around this time of year aren’t quite the same. Cup Week saw people participate in smaller events, but nothing like the spectacle with which it’s usually associated. Other events like the Santa Parade and the City Mission’s Christmas Day Lunch have been cancelled. And now we’ll be getting used to new forms of restrictions as we move from the COVID levels system to the traffic lights arrangement.
But other things do remain the same… such as property sales. Our conveyancing team continues to be busy, with a continuing trend of record auction prices. It’s particularly good to see an uplift in first home buyers. CoreLogic reports their share of the market represented a record high in the three months ended September at 26.4 percent of all sales, up from 21.5 percent in the previous quarter.
Rushed credit legislation leads to new lending requirements
From Wednesday 1 December, banks, finance companies and their customers will face new obligations and paperwork as changes to the Credit Contracts and Consumer Finance Act come into effect.
Among other requirements, before lending money, lenders will need to:
As a borrower, the key point is that you can’t expect loans to move as easily as they might have in the past. Set aside more time, and be expected to provide more details of your financial situation.
While banks, financial service business and mortgage brokers seem to back the intent of the changes, the policies are expected to have a number of unintended consequences and make some business harder than it needs to be. As Mortgage Lab CEO Rupert Gough puts it, “The 1% of the market that are targeting vulnerable people (with predatory lending) have caused the other 99% to have to do all this extra work.”
Good Returns also notes that lenders are concerned the changes have been rushed through Parliament.
What obligations are on employers to pay employees in full through lockdowns?
Since the pandemic and its associated lockdowns began, wage subsidies have helped employers and employees grapple with periods of reduced or ceased work. But one situation where that didn’t run smoothly was a case recently heard at the Court of Appeal, between an aviation catering company and five of its employees.
During the first lockdown, the company needed to shut down most of its operations. It was deemed an essential service, but had very little work to offer its employees. As such, the company proposed to pay employees at least 80 percent of their normal rate.
In some cases, this meant employees were receiving less than the minimum wage. The five employees who brought the action alleged this was unlawful.
Following determinations by the Employment Relations Authority (in favour of the employees) and the Employment Court (in favour of the company), the Court of Appeal was tasked with answering:
Whether, in the absence of sickness, default, or accident, the minimum wage is payable for all of a worker’s agreed contracted hours of work or whether it is lawful to make deductions from wages for lost time not worked at the employer’s direction
Or, put another way:
The Minimum Wage Act 1983 provides that certain employees are entitled to be paid for their work at not less than the prescribed minimum rate. Does this protection apply only in respect of time actually worked by an employee? Or does it also apply in respect of hours that the employee has agreed to work, and is available to work, but does not work at the direction of their employer?
The Court found that the deductions made were not lawful.
It is not lawful to make deductions from wages for lost time not worked at the employer’s direction. The minimum wage is payable for the hours of work that a worker has agreed to perform, but does not perform because of such a direction.
The decision does not remove the possibility that an employer and employee can come to an agreement to change hours worked, or for reductions in pay. But it has to be a mutual agreement, not just an employer’s direction.
The case could have implications for other employers who paid employees at reduced rates through lockdowns--but the fact this company was an essential service could distinguish matters. If you’re an employer or employee unsure of where you stand, feel free to get in touch with us for guidance.
Can adult children sue their parents?
Adult children disagreeing with their parents is nothing new. Adult children suing their parents for breach of a fiduciary duty… that’s a little newer.
But it’s the situation that arose in a recent case, upon which Auckland barrister Anthony Grant has provided commentary.
It involved a claim by three children against their father, referred to in the case as Mr. Z. Z caused the children great harm and suffering during their younger years, that left them “disadvantaged in various ways as adults”.
Z, anticipating his children might make a claim against his estate after he died, moved his assets into a trust so that they would not have access to them. The children, now adults, applied to have the trust set aside and the assets returned to his estate where they could be claimed for breach of his fiduciary duties to them.
They were successful.
But while parents owe fiduciary duties to infant children, it hasn't been generally accepted that this extends to adult children. So why did the Court hold differently here? The judge held:
“At the time he gifted the property [to the trust] Mr Z owed each of the plaintiffs a duty to recognise them as members of his family and to provide for them from his wealth, due to the vulnerability [that] his earlier breach of fiduciary duties had caused them.”
Therefore, the decision arose from Z’s extreme mistreatment of his children in their youth, and the need to dispense appropriate justice in the particular circumstances. The same fiduciary obligation might not exist where a parent simply seeks to avoid conferring assets to adult children. Of course, only time will tell whether it will have a wider-ranging effect.
Thanks for taking the time to read another issue of Legalchat! We’ll be with you a little earlier in December for one last message before the Christmas season. But as always, we’re just an email or phone call away for any questions, help or advice.
But other things do remain the same… such as property sales. Our conveyancing team continues to be busy, with a continuing trend of record auction prices. It’s particularly good to see an uplift in first home buyers. CoreLogic reports their share of the market represented a record high in the three months ended September at 26.4 percent of all sales, up from 21.5 percent in the previous quarter.
Rushed credit legislation leads to new lending requirements
From Wednesday 1 December, banks, finance companies and their customers will face new obligations and paperwork as changes to the Credit Contracts and Consumer Finance Act come into effect.
Among other requirements, before lending money, lenders will need to:
- make specific inquiries about the borrower’s needs and objectives, to help ensure the credit product is suitable
- make specific inquiries in order to assess the borrower’s income and expenses to be satisfied that the repayments are not likely to cause substantial hardship to the borrower.
As a borrower, the key point is that you can’t expect loans to move as easily as they might have in the past. Set aside more time, and be expected to provide more details of your financial situation.
While banks, financial service business and mortgage brokers seem to back the intent of the changes, the policies are expected to have a number of unintended consequences and make some business harder than it needs to be. As Mortgage Lab CEO Rupert Gough puts it, “The 1% of the market that are targeting vulnerable people (with predatory lending) have caused the other 99% to have to do all this extra work.”
Good Returns also notes that lenders are concerned the changes have been rushed through Parliament.
What obligations are on employers to pay employees in full through lockdowns?
Since the pandemic and its associated lockdowns began, wage subsidies have helped employers and employees grapple with periods of reduced or ceased work. But one situation where that didn’t run smoothly was a case recently heard at the Court of Appeal, between an aviation catering company and five of its employees.
During the first lockdown, the company needed to shut down most of its operations. It was deemed an essential service, but had very little work to offer its employees. As such, the company proposed to pay employees at least 80 percent of their normal rate.
In some cases, this meant employees were receiving less than the minimum wage. The five employees who brought the action alleged this was unlawful.
Following determinations by the Employment Relations Authority (in favour of the employees) and the Employment Court (in favour of the company), the Court of Appeal was tasked with answering:
Whether, in the absence of sickness, default, or accident, the minimum wage is payable for all of a worker’s agreed contracted hours of work or whether it is lawful to make deductions from wages for lost time not worked at the employer’s direction
Or, put another way:
The Minimum Wage Act 1983 provides that certain employees are entitled to be paid for their work at not less than the prescribed minimum rate. Does this protection apply only in respect of time actually worked by an employee? Or does it also apply in respect of hours that the employee has agreed to work, and is available to work, but does not work at the direction of their employer?
The Court found that the deductions made were not lawful.
It is not lawful to make deductions from wages for lost time not worked at the employer’s direction. The minimum wage is payable for the hours of work that a worker has agreed to perform, but does not perform because of such a direction.
The decision does not remove the possibility that an employer and employee can come to an agreement to change hours worked, or for reductions in pay. But it has to be a mutual agreement, not just an employer’s direction.
The case could have implications for other employers who paid employees at reduced rates through lockdowns--but the fact this company was an essential service could distinguish matters. If you’re an employer or employee unsure of where you stand, feel free to get in touch with us for guidance.
Can adult children sue their parents?
Adult children disagreeing with their parents is nothing new. Adult children suing their parents for breach of a fiduciary duty… that’s a little newer.
But it’s the situation that arose in a recent case, upon which Auckland barrister Anthony Grant has provided commentary.
It involved a claim by three children against their father, referred to in the case as Mr. Z. Z caused the children great harm and suffering during their younger years, that left them “disadvantaged in various ways as adults”.
Z, anticipating his children might make a claim against his estate after he died, moved his assets into a trust so that they would not have access to them. The children, now adults, applied to have the trust set aside and the assets returned to his estate where they could be claimed for breach of his fiduciary duties to them.
They were successful.
But while parents owe fiduciary duties to infant children, it hasn't been generally accepted that this extends to adult children. So why did the Court hold differently here? The judge held:
“At the time he gifted the property [to the trust] Mr Z owed each of the plaintiffs a duty to recognise them as members of his family and to provide for them from his wealth, due to the vulnerability [that] his earlier breach of fiduciary duties had caused them.”
Therefore, the decision arose from Z’s extreme mistreatment of his children in their youth, and the need to dispense appropriate justice in the particular circumstances. The same fiduciary obligation might not exist where a parent simply seeks to avoid conferring assets to adult children. Of course, only time will tell whether it will have a wider-ranging effect.
Thanks for taking the time to read another issue of Legalchat! We’ll be with you a little earlier in December for one last message before the Christmas season. But as always, we’re just an email or phone call away for any questions, help or advice.
Regards,
Clive, Grant and the Team at Canterbury Legal
