Here is some guidance about how to get civil judgments and other debts enforced, focusing on options if you are owed money by either an individual or employer.

Bankruptcy

When trying to get someone to pay a debt, the first consideration is figuring out what assets the person has. Sometimes the threat of bankruptcy might be better than actually doing it.

Bankruptcy is a serious threat. It lasts for three years, will ruin your chances of getting credit from the bank and impede you from being a company director. If you get caught doing any of these things, you could be sentenced to a term of imprisonment.

Often the threat of bankruptcy will lead to the person beginning to pay the debt by instalments. It would be pointless to cripple someone financially when you can get paid over time rather than bankrupting them and receiving nothing.

Examination hearings

If someone doesn’t appear to have money to pay the debt, you can apply to the High Court or the District Court, depending on the amount of money involved, to have the debtor cross- examined by your lawyer on oath. Depending on the information you uncover, various applications can be made to secure any assets that the debtor may have.

For example, a warrant to seize enables a bailiff to take and sell property belonging to a debtor. If a debtor has no obvious assets but receives a benefit or has a job, attachment orders can be placed on their income to deduct instalment payments to pay off the debt.

Divestment and trusts

Unless there is a record of something, it can be hidden. A bankrupt person may attempt physically to hide assets to avoid the Official Assignee, or they may decide to set up a trust and transfer their assets into it. If this happens within two years of a judgment being obtained against someone, it can be overturned by the Official Assignee. And the Official Assignee can call up loans related to that divestment.

Bear in mind that the Official Assignee deals with thousands of bankruptcies, so staff have to work hard to keep up with the workload. So it would be unrealistic to expect perfection when it comes to tracking down all of a debtor’s assets.

If the person attempts to leave New Zealand, they can be arrested. If you can satisfy a District Court judge that someone is leaving the country without paying their creditors, you can have them arrested and kept in court until their assets are secured to meet those debts.

Employers

When there has been an award made against an employer in the Employment Relations Authority (“the ERA”), this usually results in payment because there are stiff penalties for non-compliance. Employment Court judgements can be more difficult for individual litigants to enforce, especially if they are out of work and lack the financial ability to pursue the matter. Many plaintiffs can’t afford a lawyer to enforce the judgment, so they seek support from third-party organisations, such as unions, workers’ advocates or collections agencies.

There is a range of tactics that you can use to get a settlement of a debt. Some of these may involve diplomacy or employing a mediator. It is possible to pursue an employer who goes overseas by serving documents on relatives in New Zealand if there is no forwarding address or via e-mail if the authority in question accepts that as a means of substituted service.

There may be power in reminding an errant employer that their name could be added to the list of non-compliant employers which is maintained by the Labour Inspectorate. Employers on the list are barred from employing migrant labour.

ERA decisions can be escalated to the Employment Court if an employer refuses to pay. If there is a breach of a compliance order made by the ERA, section 140(6) of the Employment Relations Act 2000 empowers the court to impose a range of sanctions, including a fine, sequestrations and/ or imprisonment. Alternatively, it may be possible to go after the employer’s personal assets.