2019 Litigation Forecast
New Zealand businesses saw some substantial changes in 2018, much of it driven by an active enforcement programme by regulators and legislative change. For example, as predicted in our 2018 Litigation Forecast, the past year saw the first test for unfair contract terms being brought by the Commerce Commission and the Labour government rolling out a raft of legislative change, particularly in the Employment space.
We see this trend continuing in 2019, with impetus added by the focus on both sides of the Tasman in 2018 on conduct and culture within the financial services industry and as new legislation here and overseas begins to bite.
In the financial regulatory space, we expect to see heightened scrutiny by regulators on culture and conduct in the financial services industry, and increased enforcement of anti-money laundering and anti-bribery and corruption laws. Similarly in the economic regulatory space, we see continued vigorous enforcement by the Commerce Commission of consumer protection legislation, particularly in relation to responsible lending, retail telecommunications, online retail and motor vehicle sales, with higher fines and penalties being sought and awarded. This will be enhanced by a market studies power and the potential criminalisation of cartel conduct being added to the Commission’s armoury.
Class actions has been a slow burn, but several decisions in 2018 will have given encouragement to potential claimants and offer the prospect of more activity in this space, particularly if the Law Commission’s currently parked review into class actions is restarted. With the scale of cyber events assailing business (likely to increase in volume and scope in 2019) and rigorous enforcement of cross-border enforcement regimes such as Europe’s recently implemented General Data Protection Regulations (GDPR), the potential for further development of class actions adds to an environment of enhanced litigation risk. 2019 will see New Zealand’s regulatory response to the threats posed to data integrity with the long anticipated amendments to the Privacy Act expected to be enacted.
Employment, environment and construction are also areas of likely activity in the year ahead. The changes to employment law the Labour government has been rolling out coupled with more emboldened and assertive trade union activity will see further industrial action in 2019 and more cases being brought before the Employment Relations Authority and the Employment Court. We predict an increased focus by local authorities on the use of resource management enforcement tools, and the demand for rapid infrastructure and housing development driving greater litigation around authorisation and consents. The construction industry faces major systemic issues which have already seen significant and well publicised casualties in 2018. Expect more activity in this space as the legacy created by past practices yields ongoing disputes while broader solutions are sought.
All of this contributes to heightened risk for businesses in 2019 and the potential for becoming embroiled in disputes or subject to regulatory scrutiny and enforcement. Businesses would be wise in these circumstances to tread warily, familiarise themselves with the regulatory regime within which they operate, proactively take steps to embed compliance within their systems and culture, and seek expert advice. Our leading, national litigation and dispute resolution team work closely with regulators and for our clients. We are adept at assisting regulatory investigations, prosecutions and civil proceedings, and with helping businesses plan for the legislative changes impacting on them. We are here to help when you need us.
We predict culture and conduct will be a continued theme in 2019, as calls continue for deeper accountability of boards, executives and senior managers.
Competition and consumer
Vigorous enforcement was our prediction for 2018, and that looks set to continue into 2019. Lending, online retail, and motor vehicle sales can expect attention.
We expect the year ahead to bring further development of New Zealand's class actions regime, pending case law and several ‘watch-this-space' group claims.
The renewed focus from government agencies in 2019 should help organisations step-up their cyber resiliency efforts and safeguard privacy.
A raft of legislative change has come through the Labour-led Government, along with advancements on the ‘Fair Pay Agreements' concept.
As the industry grapples with a litigious environment, innovative pre-dispute and pre-litigation procedures are set to become more prominent.
The Government has outlined its expectation for local authorities. We predict more proactivity to crack down on environmental offending.