Wildfires in LA, a Queen Street water main burst, & Auckland fire truck concerns. Stay updated on the latest stories here.
Purchased a lemon of a vehicle, been kicked out of your flat or had a builder bungle a renovation? There are multiple avenues for people seeking justice and each year nearly 100,000 New Zealanders do just that, pursuing $150 million worth of claims through the civil justice system. But, as Jeremy Wilkinson finds, some people who take this route win - but still don’t get justice.
“No assets including vehicles able to be seized. Debtor is unable to pay. Company is a paper company - no real assets.”
Those were the notes a court bailiff wrote after attempting to enforce a court order for a $22,000 deposit that was paid to a drone company for work it never did.
Despite multiple wins through the Disputes Tribunal and an order from the district court enforcing the debt, it has been nearly two years since Jeremy Neilson first paid the deposit to 3DImageVu - and he still hasn’t seen a cent of it.
It’s not just about the money, he told NZME, but the principle as well. He’s also frustrated by a justice system he says re-victimises those who come to it for aid.
“I’ve won every order I’ve sought and still he’s able to apply for rehearing after rehearing and dodge the bailiffs.
“It’s ridiculous to me that this is even possible.”
But, what many people don’t realise is the Disputes Tribunal doesn’t have the power to enforce the orders it makes and requires a separate order from the district court to give it any power.
Even then, court bailiffs are limited in what they can legally confiscate from a debtor.
Tribunals and professional disciplinary bodies
There are roughly 45 tribunals in New Zealand and they fall into two main categories.
The first is what is broadly described as consumer or civil tribunals and they deal with small claims involving goods or services - things like the Motor Vehicle Disputes Tribunal, the Tenancy Tribunal and Disputes Tribunal. There’s even an avenue through the Human Rights Review Tribunal to seek compensation if you’ve been fired from your job for getting pregnant or racially harassed by your flatmate.
The second category is professional disciplinary bodies that deal with breaches of conduct by lawyers, realtors, doctors, teachers, tradies - even vets and jockeys. These tribunals often deal with people who have breached their professional responsibilities but haven’t necessarily broken the law.
In many cases, these disciplinary tribunals simply relitigate a finding from the criminal courts and impose their own professional punishments like censure or a fine on top of whatever conviction the person has acquired.
Meanwhile, tn the civil tribunals, a plaintiff also effectively becomes a prosecutor; a person takes a landlord, car dealer or company to task and tries to get compensation from them.
About 250 members, referees and adjudicators oversee the hearings and are responsible for delivering justice to about 100,000 parties totalling claims valued at $150 million per year.
The tribunal landscape in New Zealand has had various reforms proposed over the last 60 years, with almost none of them adopted.
In November, Justice Minister Paul Goldsmith did, however, table a bill before Parliament that would see the damages cap in the Disputes Tribunal increase from $30,000 to $60,000.
Justice Minister Paul Goldsmith tabled a bill in November that would see the Disputes Tribunal cap doubled to $60,000. Photo / Mark Mitchell
Raising the cap is estimated to open the door to a further 2000 claimants each year; at the moment they have to lower their claim to fall within the Disputes Tribunal jurisdiction.
But for some, like Neilson, it’s fixing only half the problem if neither the tribunal nor the court can actually force the company that owes him $22,000 to pay up.
After winning at the Disputes Tribunal, a complainant can pursue collection of their debt through the district court, which has the power to enforce orders made by the courts, tribunals and other authorities.
That is the route Neilson took after winning at the tribunal in 2023. He was able to obtain a warrant for a court bailiff to seize assets from 3DImageVu. Except, that bailiff couldn’t take anything because on paper the company doesn’t have any assets.
Cost recovery: An ongoing issue
While there’s little data to show how much total debt is outstanding across the tribunals, a recent report from the Ministry of Justice identified cost recovery as an ongoing issue.
“Even when disputants secure an outcome in their favour, enforcing the outcome can prove challenging and may necessitate further dispute resolution,” that report noted.
Another report from the District Courts of New Zealand Rules Committee found the same issue and suggested granting Disputes Tribunal referees limited civil enforcement powers, the ability to certify monetary judgments, and implement an enforcement plan within the decision itself.
“We recommend that further consideration be given to improving the process for enforcement of Disputes Tribunal orders in the District Court,” the report said, suggesting the courts think about ways to improve the enforcement of tribunal awards.
In 2014, the late Chester Borrows varied the District Courts Amendments Act to make it easier to obtain an attachment order, which allows for deductions to be made from a debtor’s wages or benefit. That halved the number of court appearances needed from two to one and waived the $250 fee.
Former Whanganui MP Chester Borrows. Photo / Supplied
Other than an attachment order, there are a number of ways the district courts can help a person collect a debt.
An application can be made for a court bailiff to seize property belonging to the debtor; if the debtor is selling land, a person can apply to halt proceedings; or if the debtor is also owed money, a person can apply as a garnishee to have that debt paid directly to them instead.
But as Neilson found out, even with a debt enforcement order to seize the company’s assets, he still can’t get his money - partly because 3DImagueVu doesn’t have any.
Neilson estimates he would have spent up to 80 hours preparing for and attending hearings to try to recoup the money his company is owed, and he describes the process as not exactly user-friendly.
“After we won [at the Disputes Tribunal] we then had to get an enforcement order and it’s not entirely clear what the best path is,” he said.
“Then there’s financial assessment hearings and warrants you need to obtain, with each stop costing more money.
“And each step could take months, so if you choose the wrong path, then it can really set you back.”
In terms of advice for any creditor hoping to use the tribunal to achieve justice, Neilson still thinks it is a cost-effective way to chase the debt.
“It’s relatively cheap and straight-forward on the tribunal side of things, but it’s when it reaches the district court that it gets more complex,” he said.
“And there should be an obvious caveat that there’s nothing the tribunal can do to enforce your order if you win.
“If they had the power, this whole process could have been wrapped up fairly quickly.”
Neilson has just won another hearing at the Disputes Tribunal in November, after 3DImageVu’s Rowland Harrison applied for one, claiming he didn’t receive confirmation of a new hearing date.
“I am not satisfied 3DImageVu should keep any of the deposit. First, the contract is quiet on whether the deposit is refundable. Second, because the contract was cancelled due to a breach by 3DImageVu, it is reasonable to imply a term the deposit is to be refunded,” a tribunal referee noted in the latest judgment.
Harrison maintains, despite the tribunal ruling to the contrary, that the deposit was non-refundable and Neilson had cancelled the contract.
Harrison told NZME that following the latest ruling he did in fact, intend to pay up.
“We take it on the chin and we’ll pay it and move on,” he said.
“Now the whole process has gone through, we’ll pay.
“There’s no intention on our behalf to avoid payment.”
End of the rainbow
So what are the options for people who simply can’t extract money from people who owe them, despite the backing of a tribunal and a court?
Mark Francis, executive general manager of debt collection agency Debt Managers, says it’s best to speak to a debtor first to find out why they’re not paying.
“We know that a lot of ‘won’t pays' are really ‘can’t pays' that can’t articulate that they can’t pay. So it’s easier for them to refuse to pay,” he said.
“We have a lot of shame around talking about debt... so they’d rather avoid it, than simply say to you, ‘I can’t pay'.”
In terms of giving the tribunal more teeth to enforce its own orders, Francis doesn’t see that as a solution.
“From a creditor’s perspective I can say it’s probably not as strong as the general public would like.
“But we have to ask ourselves, if it were stronger would injustices occur? Arguably we need a system that is neither strong, nor weak.”
Francis no longer collects tribunal debts, but said with things like Tenancy Tribunal orders, historically many landlords simply didn’t get their money back despite having the power of the court behind them.
“We need a society where people do feel obliged to pay their debts, because most of us do.
“The people that are not paying are being unfair to those of us that do so. I think the standpoint is, all debt must be paid back, or should be paid back... I guess the caveat is, as long as it causes no further harm.”
Francis said repossessing items in New Zealand was much harder than a lot of people thought because a bailiff had to prove ownership.
“And do we want a society where TV’s are being ripped off walls to pay for debt?
“I don’t.”
Mark Francis of Debt Managers. Photo / Supplied
Another creditor, Mark Graham, purchased a pair of ski boots on Facebook Marketplace before accidentally paying that same person an $11,000 invoice meant for someone else.
He’s spent nearly four years trying to get the money back and has had three wins through the Disputes Tribunal - but still hasn’t seen a cent of it.
“We still haven’t been paid because regardless of the finding, the third party just won’t pay it,” he told NZME.
“They can send bailiffs round but she doesn’t have any assets. So there’s nothing for them to take.”
Graham referred the matter to a debt collection agency but wasn’t optimistic it would yield any results. The woman involved didn’t disclose whether she had a job so Graham couldn’t seek an attachment order on her salary.
“I don’t hold out much hope of actually getting any money.”
More complicated than TV
Otago University law associate professor Bridgette Toy-Cronin told NZME that in most cases people who had been ordered to pay were generally law-abiding citizens who did fork out.
“But, there’s always going to be a percentage of cases where that won’t happen,” she said.
“In those cases, then litigants can be very surprised that the adjudicators don’t just do it for them and that’s a problem of communicating process up front to litigants.”
She said it was a problem across the justice sector in terms of explaining to parties how the system works and what to expect.
“It’s a lot more complicated than TV dramas make it look. There’s not that sense that you can go to court and get it sorted in one day… so people can become frustrated when that doesn’t happen.
“So there’s a job to be done to make sure that process is explained to people so they have proper expectations.”
Bridgette Toy-Cronin of Otago University. Photo / ODT
She said the upside of the tribunal was a double-edged sword in that not having lawyers involved reduced barriers for people, but if people did take their case to a lawyer first, the first thing they would do is check if the defendant had any finances - and whether there would likely be any money at the end of the case.
“There would be some effort to find if there’s money at the end of the rainbow,” she said.
“If they have no assets, or are in the process of liquidating, then you’d have to advise the client not to bother. Essentially there’s no one and nothing to recover against.”
In terms of having the court repossess items, Toy-Cronin said it was a “messy” process because there were complicated rights about what kinds of assets could be recovered.
“It’s not a very easy area of law - lots of different mechanisms depending on what is being claimed and against whom - which is partly why it does have to go through the district court,” she said.
“There’s not a clear and easy way to do it essentially.”
While that’s not really what creditors wanted to hear, Toy-Cronin said that fronting the bad news about the likelihood of recovering debt from someone who wouldn’t or couldn’t pay would soften the blow, rather than waiting until they’d gone through the hassle and stress of a tribunal hearing.
“I think managing people’s expectations up front is really important because once people are well into a court process and have a judgment in their favour and realise there’s no money or it’s going to be very difficult to extract it, then they’re rightfully going to be very distressed.”
In terms of granting more power to the Disputes Tribunal, Toy-Cronin didn’t see that as a solution.
Instead, she thought it would be better to reform the district court’s ability to enforce debt rather than attempt to duplicate it at a tribunal level.
Jeremy Wilkinson is an Open Justice reporter based in Manawatū covering courts and justice issues with an interest in tribunals. He has been a journalist for nearly a decade and has worked for NZME since 2022.
