There are a number of options available in New Zealand to identify another party's asset position. These include:
Once the assets in the jurisdiction have been identified, it is possible to obtain freezing, charging, attachment, sale and possession orders in New Zealand. These orders are discussed below.
There are several different types of judgments available in New Zealand. Generally, judgments will follow the trial of a dispute and will be in the form of:
These types of judgments are known as executory judgments. In each case, a court considers the respective rights of the parties and makes a determination ordering the defendant to act in a certain way.
In addition to obtaining a judgment following a full trial of the dispute, it is also possible to obtain:
There are a number of ways to enforce domestic judgments. A judgment creditor can apply to the court for civil enforcement action against a debtor when two conditions are met:
Where the judgment debtor is an individual, the judgment creditor may apply to the court for an attachment order.
An attachment order is designed to secure a creditor′s right to the debtor′s earnings by requiring their employer to pay the creditor directly. The order accomplishes this by creating a charge over the salary or wages of the judgment debtor, which, once in place, requires the debtor′s employer to pay a portion of the debtor′s salary or wages to the party seeking enforcement.
It is important to note that the procedure for seeking an attachment order differs depending on the court in which the judgment was obtained:
In the District Court, the applicant will need to provide:
The applicant can propose the amount or percentage of the payments they believe should be deducted from the debtor’s salary/wage. The Court will assess whether the proposal is reasonable with consideration of the debtor′s personal circumstances.
In the High Court, no order can be made unless:
After examining the debtor′s personal circumstances, the applicant can apply for an attachment order, and the court will assess the amount/percentage that should be deducted from the debtor's wages.
Charging orders are available in both the District Court and the High Court. A charging order places a “charge‟ over specific property owned by the judgment debtor (land, securities, or certain other assets) in the amount owing from the judgment sum.
The order operates as a “stop order‟, preserving or holding the property and preventing it from being disposed of by the judgment debtor. The charging order does not give the holder possession or ownership of the property; instead, it entitles the holder to apply to the court for a sale order to complete execution. It should be noted that, even if a sale order is not obtained, the charge holder is a “secured creditor‟ for the purposes of insolvency proceedings. However, should the judgment debtor declare bankruptcy, the charging order will no longer be enforceable.
The process for obtaining a charging order is relatively straightforward and can be made without notice being given to the other party. The application must:
If the judgment debtor owns the land (or other asset), once a charging order is obtained, the judgment creditor can place a caveat on the land′s title.
If a third party owes the judgment debtor money, the judgment creditor can apply to the court for that money to be paid directly to them. A garnishee order can attach to money in a bank account or a solicitor's trust account.
This order is only available in District Court. In the High Court, a similar outcome can be achieved through a sale order.
Available in relation to judgments obtained from the High Court (or District Court judgments transferred to the High Court), a sale order authorises an enforcing officer to seize personal property and sell it to satisfy the judgment debt. The enforcing officer can seize all the judgment debtor′s property except:
A sale order can also entitle the enforcing officer to sell land. While not required, it is easier to accomplish this if a possession order has been obtained first, as adverse possession tends to disrupt a sale.
Possession orders are available where a judgment orders the debtor to deliver land or chattels to the judgment creditor. A possession order is often made in conjunction with a sale order.
A possession order authorises an enforcing officer to deliver possession of the specified land or chattels to the judgment creditor. To do this, the enforcing officer has the power to:
As mentioned, it is not necessary for a possession order to be obtained to sell land, but it is often beneficial. In relation to chattels, it is necessary to seize them before they can be sold.
A judgment creditor may apply to the court for an order freezing the judgment debtor′s assets pending enforcement (or, indeed, prior to judgment). This is an interim relief used to prevent the debtor from dissipating their assets, as such, it is only available where the judgment creditor can show there is a real risk of dissipation.
If the judgment debtor is an individual and the judgment debt is over NZD1,000, the judgment creditor can apply for the judgment debtor to be adjudicated bankrupt.
For an application to be made, the judgment debtor must have committed an act of bankruptcy within three months of the application. The judgment debtor commits an act of bankruptcy if:
Once the judgment debtor is adjudicated bankrupt, the Official Assignee will take control of the judgment debtor′s income and assets. The job of the Official Assignee is to realise funds for distribution to the creditors.
If so adjudicated, the bankruptcy will generally last for three years. During this period, the bankrupt individual will usually be unable to travel overseas, manage a business, or be employed by relatives without the consent of the Official Assignee.
If the judgment debtor is a company and the judgment debt is over NZD1,000, the judgment creditor can apply for the company to be placed into liquidation.
To initiate liquidation proceedings, the judgment creditor will need to serve a statutory demand on the company. The company will then have ten working days to apply for the statutory demand to be set aside or 15 working days to pay the debt. If the debt is not paid and no application is made to set aside the demand, the judgment creditor can apply for liquidation.
Once in liquidation, the liquidator will take total control of the company. The liquidator represents the creditors of the company and will realise the company's assets to repay the company's debts. Once the company’s funds are distributed and the liquidation is complete, the company is usually removed from the Companies Office Register.
The costs and time to enforce a judgment will depend on the enforcement method chosen and the complexities of the case. Theoretically, applying for an order to enforce a judgment should be straightforward and able to be achieved in a relatively cost-effective manner.
However, even a straightforward application can face increased time and cost if challenged by the defendant. A common example is when a judgment creditor seeks an order of sale once they have obtained a charging order. While a charging order works as a stop order and safeguards the asset in question, to actually sell the asset, the judgment creditor needs to apply for an order of sale. This application will often be disputed, particularly where a major asset like a family home is involved and the judgment debtor has limited equity in the property, or the property is jointly owned.
The commencement of bankruptcy or insolvency proceedings requires a professional person to be appointed. This person will be paid out of the estate of the judgment debtor, reducing the size of the asset pool available for distribution to creditors. Additionally, the assets are distributed in a set order of priority: secured and preferential creditors are paid out first, and then what is left of the asset pool is distributed across all unsecured creditors pari passu (in accordance with the level of debt – pro rata). It is common for unsecured creditors only to receive a small portion of the debt they are owed. Further, there are often challenges to claims of priority, causing delays in enforcement and adding to costs.
The most efficient option for enforcing a judgment will often depend on the size and nature of the judgment debtor′s assets relative to the size of the judgment debt. For example, if the judgment debtor owns significant property, then a charging order may be appropriate. However, if the judgment debt is relatively small, a sale order may be more difficult to obtain. Equally, whether the property already has existing charges registered against it will be of relevance. Attachment orders are commonly sought, but their efficacy may also depend on the size of the debt and the level of repayment. For example, a significant debt may result in only limited recovery over a lengthy period.
In order to maximise a judgment creditor′s prospect of recovery and protect against loss, it may be that several different enforcement options are pursued. What is available will depend on the circumstances of the case.
As discussed above, there are a number of publicly available sources for determining the assets of a judgment debtor.
In addition, a judgment creditor may serve a judgment debtor a notice to complete a questionnaire that states the party′s ability to pay the judgment, known as a financial statement.
If the judgment debtor is uncooperative, the judgment creditor may apply to the court for an order for examination. This requires the judgment debtor to present to the court or a person appointed by the court and be examined under oath about their financial position.
There are two main ways in which enforcement of a judgment can be challenged.
Challenging the Enforceability of the Judgment
A common way the enforceability of the judgment is challenged is by saying the court either did not have jurisdiction to rule on the matter or that the judgment is not final and is still being considered by the court. Examples of this type of challenge are:
Challenging the Method of Enforcement
Defendants may also challenge the method of enforcement sought by the judgment creditor. Often these challenges occur because the judgment debtor will be prejudiced if the enforcement is allowed in the manner sought or that there are questions over the ownership of the asset in question.
Subject to any challenges to enforcement, any judgment obtained in a New Zealand court requiring the defendant to pay an amount of money or act in a particular way can be enforced by the courts of New Zealand.
As mentioned, a judgment for declaratory relief cannot in itself be enforced but may still be effectively enforced if a defendant acts contrary to the declaration. However, in practical terms, this would require new proceedings to be brought on the basis of the court′s declaration and the judgment creditor seeking to enforce the judgment in the new proceedings.
In New Zealand, there is no central register of judgments. The Ministry of Justice maintains an online database of court judgments called “Judicial Decisions Online‟. This database includes:
Alternatively, a sample of District Court judgments, with emphasis on significant decisions or particular interests, can be found on the District Court website.
The Ministry also maintains an online decisions finder where most of the Special Jurisdictions′ decisions can be assessed.
The historical decision of the courts and other legal materials are available on a database maintained by the New Zealand Legal Information Institute.
There are four methods of enforcing foreign judgments in New Zealand. The country from which the judgment was obtained, the date of the judgment and the subject matter will determine which regime will apply.
Trans-Tasman Proceedings Act 2010
Judgments obtained in an Australian court may be enforced under the Trans-Tasman Proceedings Act.
This Act relates to all Australian judgments, except those relating to specifically excluded matters, and allows for streamlined enforcement in New Zealand as if the judgments had been obtained from a New Zealand court. This Act also works in reverse, allowing New Zealand judgments to be enforced in Australian courts.
Senior Courts Act 2016
The Senior Courts Act replaced the Judicature Act 1908 and applies to all judgments obtained in Commonwealth countries.
Under this Act, only final money judgments can be enforced in New Zealand. This Act provides for money judgments to be registered with the New Zealand High Court and become enforceable as if obtained in the New Zealand courts subject to certain criteria.
Reciprocal Enforcement of Judgments Act 1934
Foreign judgments from non-Commonwealth countries with which New Zealand has a reciprocal agreement may be enforceable under the Reciprocal Enforcement of Judgments Act. The countries to which this Act applies are set out within this Act and subsequent Orders.
Foreign judgments may be registered in the New Zealand High Court and enforced as if they had been obtained in New Zealand, subject to criteria similar to those applying under the Senior Courts Act 2016.
Enforcement under Common Law
Judgments from countries with which New Zealand has no reciprocal arrangements for enforcement (notably the USA, China and Russia) will need to be enforced in New Zealand under the common law. This requires fresh proceedings to be issued in the New Zealand courts, based on the foreign judgment.
After obtaining a judgment that is enforceable in New Zealand, it is open to a judgment creditor to consider the domestic enforcement options discussed above.
In New Zealand, foreign judgments are treated differently depending on the country in which the judgment was obtained:
The nature of a foreign judgment will also have a bearing on its enforceability in New Zealand. Some relevant considerations are:
In New Zealand, the only foreign judgments able to be enforced are money judgments requiring payment of a debt or some other definite sum of money. Money awards in relation to taxes, fines, or penalties are generally not enforceable in New Zealand. The Trans-Tasman Proceedings Act provides an exception to Australian judgments imposing civil pecuniary penalties (which have not been excluded by the Governor General by an Order in Council).
Foreign judgments for injunctions or orders prohibiting/requiring the doing of an act are unlikely to be enforced in New Zealand. The only exception is Australian judgments for interim injunctions and interlocutory relief, which the Trans-Tasman Proceedings Act states are registerable judgments.
The same is true in relation to declaratory judgments. Under the Trans-Tasman Proceedings Act, an Australian judgment that is final and conclusive and given in a civil proceeding by an Australian court is a “registrable Australian judgment″. The Act sets out what types of judgments or orders are excluded, and as declarations are not excluded, it is presumed that they can and will be enforced where applicable in New Zealand.
There are a number of Australian judgments that are not able to be enforced. These are judgments relating to an “excluded matter‟, defined in the Trans-Tasman Proceedings Act as:
Trans-Tasman Proceedings Act 2010
Australian judgments may be enforceable under the Trans-Tasman Proceedings Act. A person who has received a judgment in their favour from an Australian court may register it under the Trans-Tasman Proceedings Act. Once registered, the judgment can be enforced by the New Zealand courts as if obtained in a New Zealand court.
In order to be registered, a judgment must be:
An application for registration must be in the prescribed form and accompanied by a copy of the Australian judgment. The application can be filed at any court with jurisdiction to give the relief ordered in the Australian judgment.
Once registered, notice will be given to the liable party within 15 working days. The judgment becomes effective as if it was a New Zealand judgment from the date of registration or, if no notice is given, 45 working days after registration.
Senior Courts Act 2016
Under the Senior Courts Act, any judgment, decree, rule, or order obtained in any court of a Commonwealth country for the payment of money can be enforced in New Zealand.
To enforce such a judgment, a person may file in the High Court a memorial containing the specified particulars of the foreign judgment, authenticated by the seal of the court in which it was obtained. Once filed, the memorial becomes a record of the judgment, and execution may issue upon it.
The memorial must be signed by the party in whose favour the judgment was obtained and contain the following particulars:
Reciprocal Enforcement of Judgments Act 1934
Foreign judgments may also be enforced under the Reciprocal Enforcement of Judgments Act. This is only available where judgments are given by a country with which New Zealand has a reciprocal agreement.
Under the Act, parties may register judgments in New Zealand. Once registered, the judgment can be enforced as if it had been given by the New Zealand High Court.
To be registered, the judgment must come from a country listed in the Act or subsequent Reciprocal Enforcement of Judgments Orders. As a general rule, the Act only applies to judgments obtained in superior courts.
A party seeking to register a judgment must apply to the High Court of New Zealand and provide evidence of:
Importantly, if a judgment is registerable, the Act is the only method available for enforcement of the foreign judgment.
Enforcement under Common Law
Foreign judgments from countries that are not Commonwealth countries and are not covered by the Reciprocal Enforcement of Judgments Act may be enforced at common law by an action or counterclaim. The simplest action is an application for summary judgment.
For a foreign judgment to be enforceable, it must:
Generally, a foreign court is regarded as having jurisdiction to give a judgment capable of enforcement in New Zealand in the following situations:
It is difficult to estimate the time it will take to enforce a foreign judgment. Timing depends on the High Court Registry in which the application has been made. As some courts are busier than others and some may have limited staffing due to the areas they service, timeframes will vary depending on when and where the application is filed.
An application under the Reciprocal Enforcement of Judgments Act is an originating application. The filing fee is NZD540.
The filing fee for an application to register a registrable Australian judgment is NZD100.
The filing fee for an application to either set aside the registration of an Australian judgment or stay the enforcement of a registered Australian judgment is NZD250.
At common law, the action to enforce a foreign judgment is commenced by filing a statement of claim. The filing fee for a statement of claim in the High Court is currently NZD1,350.
The legal fees involved will vary depending on the nature of the application.
The process for challenging a foreign judgment will depend on the regime which applies to the particular judgment.
Trans-Tasman Proceedings Act 2010
Under the Trans-Tasman Proceedings Act, a defendant can apply to set aside registration of an Australian judgment if:
Senior Courts Act 2016
Under the Senior Courts Act, once a memorial has been filed, the defendant can challenge the foreign judgment. The onus is on the defendant to show an adequate reason why the foreign judgment should not be executed against them.
Importantly, the New Zealand court is not to examine or pass judgment on the merits of the foreign judgment.
Reciprocal Enforcement of Judgments Act 1934
Under the Reciprocal Enforcement of Judgments Act, a defendant may apply to set aside the registration of a foreign judgment for any of the following reasons:
Enforcement under Common Law
A defendant can oppose the enforcement of a foreign judgment in common law on any of the grounds below. Importantly, the defendant cannot raise, by way of a defence, any matter which could have been raised in a foreign court. The relevant grounds of opposition are:
The recognition and enforcement of arbitral awards in New Zealand are governed by the Arbitration Act 1996. An arbitral award is binding irrespective of the country in which it is made and, by application to the court, can be entered as a judgment in terms of the award or by action, subject to the grounds of refusal set out in Article 36 of schedule 1 of the Arbitration Act. Enforcement attracts the full range of civil mechanisms available to the court to ensure the award debtor carries out the award.
As stated in the purpose section of the Arbitration Act, the Act gives effect to New Zealand's obligations under the following:
As stated above, the Arbitration Act governs the enforcement of arbitral awards in New Zealand irrespective of the country in which they are made and their obligations under any international conventions to which New Zealand may or may not be a signatory.
As New Zealand is a signatory of the New York Convention, arbitral awards made in New Zealand may be recognised and enforced internationally in accordance with the Convention, subject to any local procedural requirements and grounds for refusal.
Arbitral awards generally can be enforced by recognition or by recognition and enforcement. An “award” is a decision on the substance of a dispute, including an interim, interlocutory, or partial award. For enforcement, an “award” also includes an award that is varied on appeal.
Recognition alone is most often sought as a defence to claims raised in fresh proceedings already settled by arbitration. When an award only partially covers the grounds of a new dispute, recognition can be used to restrict the scope of the fresh claim.
Beyond defensive purposes, recognition can be useful in certain jurisdictions to avoid the operation of a limitation period for award confirmation. It may also be necessary to seek recognition in preparation for seeking enforcement later.
Recognition and Enforcement
If a party will not comply with an award voluntarily, it is necessary to seek enforcement through the court. Court enforcement is a two-pronged request of both recognition and enforcement. The starting point for recognition and enforcement of an arbitral award in New Zealand is Article 35(1) of schedule 1 of the Arbitration Act.
There is little variation in New Zealand′s approach to enforcement of different types of awards. The grounds for setting aside and refusing recognition or enforcement of a domestic award are substantially similar to those for an international award.
For a domestic arbitral award, the court is asked to consider its supervisory power and the maintenance of minimum standards of procedural fairness for arbitrations in New Zealand.
For an international arbitral award, the court instead considers:
An award may be defective to the extent that it is unenforceable in New Zealand. An example of this is when relief is uncertain or incomplete.
There is no power for the court to remit awards that are the subject of enforcement proceedings for a defect to be remedied under Articles 35 or 36 of the Arbitration Act. The only way to do this is through an appeal on a question of law (under clause 5 of schedule 5 of the Arbitration Act), where the court could vary the award or return it to the tribunal for consideration.
Alternatively, a party may be able to rely on Article 33 for interpretation and correction of awards and additional awards, subject to relevant time limits and consent requirements. A tribunal may make corrections of their own initiative, but it must be done within 30 days of the award.
Arbitral awards may be enforced by agreement or application to the District Court or High Court. The process outlined below is set out in Article 35 of schedule 1 of the Arbitration Act and part 20 of the District Court Rules, and part 26 of the High Court Rules.
Entry of Judgment by Agreement
No affidavit or more formal application is required if the Registrar is “satisfied that all parties have agreed‟ in accordance with the applicable court rules. The letter confirming this agreement must be accompanied by:
Once the documents are compiled, the Registrar will enter the award as a judgment as soon as practicable.
Enforcement without Agreement
When one party does not consent to the arbitral award being enforced, the other party may apply to the court for entry of the award as a judgment or for the court to enforce the award by action.
Entry of the Award as a Judgment
Applications for enforcement of an award may be brought before the District Court or the High Court, depending on the sum of the award sought to be enforced. Applications must be:
Enforcement by Action
The right to enforce an arbitral award by action recognises the fundamental term of an arbitration agreement that parties will perform the terms of any award. A proceeding by action will have the full range of remedies available before the court, including specific performance and injunction. In most cases, the action will, however, be for the creation of a simple debt by the terms of the award.
An application for enforcement by action must be made by an originating application. To enforce the award by action, it is necessary to file and serve:
The provisions of part 5 of the High Court Rules then apply to the commencement of proceedings, filing of documents and service.
In exceptional circumstances, judgment may be entered without notice. The procedure is the same as set out above, with the addition of an affidavit in support setting out the “exceptional circumstances‟ that justify the without notice application.
If, after ten days of the application for entry of an award as a judgment being served, the defendant has taken no steps, the applicant may apply to the court by a letter to the Registrar for the award to be entered as a judgment unopposed. The Registrar may require an additional affidavit to prove service.
Enforcement of an Award in Part
An award can be enforced in part as long as the part to be enforced is clear, and judgment can be given on the same terms as set out in the award.
Making an application to the court for leave to enforce an award is relatively straightforward. Time will depend on whether the enforcement is disputed, as set out above, and the caseload of the court.
The costs of enforcement will involve the applicable fee (at the time of writing, the fee for an originating application is NZD1,350 in the High Court and NZD200 in the District Court) as well as legal costs incurred. Additional court fees may be payable. Legal costs will depend on the amount of work required, its complexity and whether the enforcement is disputed.
Opposition to Entry of Award as a Judgment
The defendant may oppose the entry of an award as a judgment by filing within the applicable time limit:
When the defendant opposes enforcement, the application of the plaintiff is stayed, and the court then considers both applications at the same time.
Article 34 of schedule 1 of the Arbitration Act will generally have the effect of setting the award aside globally. In comparison, an order for refusal of recognition and enforcement of the award only is binding in New Zealand.
Opposition to Enforcement by Action
When a party seeks to enforce by action, a range of defences is available. They include:
The six-year limitation period for money claims under the Limitation Act 2010 applies to applications for entry of an award as a judgment and the commencement of an action to enforce an award. The limitation does not apply once an award has been entered as a judgment.
Adjournment of Enforcement Proceedings and Security
If a party applies to set aside or suspend the award, the court may “if it considers it proper‟, adjourn its decision on recognition or enforcement until the other proceeding has been determined. Under the same article, on the application of the party claiming recognition or enforcement, the court can order the other party to provide appropriate security.
Court′s Discretion not to Refuse Recognition or Enforcement
The court has a residual discretion to recognise or enforce an award, even though the grounds may not be made out.
Rights of Appeal
The Arbitration Act does not exclude the right of appeal against a decision of the District Court or High Court and does not impose any requirement for leave.
Domestic arbitral awards can be appealed on questions of law. An appeal under clause 5 of schedule 2 is considered an application for setting aside the award, and an award remitted to the original tribunal or a new one is treated as an award suspended.
In international arbitrations, the provisions of schedule 2, including the rights of appeal, are deemed to be excluded unless they have been expressly included. This means that, unless it has been expressly included in the arbitration agreement, there is no right of appeal under clause 5 for an award made in international arbitration.