Please note: Articles on this website were originally published by in 2015 and may now be out of date. Revised and updated content is included in Civil Litigation for Non-Lawyers [available here]Disclaimer


This website contains a lot of information. Some parts might be relevant to a particular difficulty but most will not. Several parts might all turn out to be relevant at the same time, and each of them relating to a different step or process. That is because there is usually more than one way to resolve a dispute and you will have to decide which option is the best one for you. This page explains how to figure out which parts of this website could be relevant. Please see the law dictionary for definitions of terms that are used.


  • Consider taking legal advice
  • What is the problem?
  • Identify and assess the issues
  • Consider the options
  • Raise the problem
  • Contracts
  • When there is no response
  • Leveraging security
  • Credit reporting
  • Threat of litigation
  • Claiming legal costs
  • Claiming interest
  • Statutory demands
  • If there is (still) no response to any threat, demand or other action
  • Abandoning the matter
  • Attempting to negotiate or engage in alternative dispute resolution
  • Giving up control over your part of the problem or taking control of other parts
  • Commencing litigation
  • Assessing risks and rewards
  • Assessing costs and benefits
  • When an argument is raised

Consider taking legal advice

If trouble finds you and you want to know how to deal with it then it may be wise to engage a lawyer to assist you at an early opportunity. A lawyer might identify issues and solutions you would not have, recommend which of many options is best for you, and save you time and costs.

See the pages about using lawyers for information about engaging lawyers and what to expect from them. 

What is the problem?

You will not be able to figure that out without first identifying, in a very general sense, the kind of difficulty you are faced with. So you need to ask what the problem is about. For example:

1. Has a crime been committed?

2. Is there a contract?

3. Has property been damaged?

4. What relationships are involved?

Is it to do with employment?

Employment difficulties have to be treated differently from the other kinds of difficulties that are addressed in this text. That is because the law imposes rights and obligations on parties in an employment relationship that it would not necessarily impose on those parties if they were not in that relationship. The consequence is that your options may be restricted right from the moment an employment problem is raised.

If employment issues are involved then the parts of this text that deal with employment difficulties could be relevant.

Identify and assess the issues 

The next step is to identify all relevant issues and assess your legal position in relation to them. Legal advice can be particularly valuable for this step. Issues might not be properly identified or assessed without legal training and experience.

Examples of the kinds of issues that could be relevant:

1. Time limits for raising or responding to the problem

2. Rules for raising or responding to the problem

3. The legal status of the parties involved and the grounds for their involvement

4. Rules that apply to the kind of problem in question

Consider the options

Available options are defined by your legal position. Generally, you could:

1. Do nothing

2. Report the problem to an authority or some third party

3. Address the problem with the party or parties who are at the cause

Whether any one of these is reasonable or appropriate will depend on your particular situation. This text is about addressing the problem with the parties at the cause of it. It covers raising a civil problem with someone and responding when a problem is raised with you.

Raise the problem

There are many different ways to raise a civil problem with someone. Discussing it with the other party first may be sensible and appropriate. A friendly approach might be for the best if the parties are in a productive relationship that could be maintained. An overly assertive or aggressive approach at an early stage might cause the other party to resist simply because they do not want to be bullied or cast as ‘the bad guy’. It may be that you can resolve the problem at this point and no further action is necessary.

However, if the problem is confirmed, continues or escalates then you may be required to resolve it in a certain way. Such requirements may have been agreed in contract or imposed by law.


Contracts sometimes include terms requiring the parties to raise and respond to problems in a particular way. Examples:

1. Either party might have to give written notice of a problem within 20 days of becoming aware of it. The other party might then be required to respond within 20 days or be taken to have waived its ability to argue.

2. The parties might agree that they cannot file a court case before going to mediation or arbitration first. They might have also agreed to how a mediator or arbitrator is to be appointed, and the procedure that is to apply.

However, it is important to note that some of these kinds of contract terms may not actually be enforceable. Legislation may provide for disputes to be resolved by a particular process, and the parties may not be able to contract out of that.


Section 238 of the Employment Relations Act 2000 provides:

The provisions of this Act have effect despite any provision to the contrary in any contract or agreement.

Section 4(1A)(b) of that Act “requires the parties to an employment relationship to be active and constructive in establishing and maintaining a productive employment relationship in which the parties are, among other things, responsive and communicative”.

Consequently, employment problems are generally expected to be raised and discussed informally at first instance. A more formal meeting or notice may be called for if that does not resolve the matter, and mediation may follow.

That is because the Employment Relations Authority must consider referring the parties to mediation if the problem escalates that far anyway, so there is an incentive to mediate before involving that Authority. If the parties do not settle in mediation then the Authority may be called upon to investigate.

Refer to the pages dealing with employment for more detail.

Residential tenancies

Section 81 Residential Tenancies Act 1986 provides:

(1) A provision in any tenancy agreement to which this Act applies, or in any other agreement entered into by the parties to any such tenancy agreement, to exclude or limit –

(a) the jurisdiction of the Tribunal; or

(b) the right of any person to invoke that jurisdiction –

shall be of no effect.

(2) Without limiting the generality of subsection (1), the Tribunal shall have jurisdiction in respect of a claim notwithstanding any agreement relating to the matter that provides for –

(a) the submission to arbitration of any dispute or difference; or 

(b) the making of an award upon such a submission to be a condition precedent to any cause of action accruing to a party to the agreement.

There is no requirement to try to work through a problem with the other party before making an application to the Tenancy Tribunal, but it seems sensible to do so. The problem you thought you had might not turn out to be a problem at all, or it could be resolved quickly and simply.

In any event, you can begin a case by filing an application at a Tenancy Tribunal office. Like the Employment Relations Authority, the Tenancy Tribunal may refer the parties to mediation if that seems a reasonable way forward. If mediation does not result in settlement then the dispute could progress to a hearing in the Tribunal.

See the pages on the tenancy tribunal for more information.

Motor vehicles

Section 91 of the Motor Vehicle Sales Act 2003 provides:

(1) A provision in any contract to exclude or limit the jurisdiction of a Disputes Tribunal or the right of any person to invoke that jurisdiction has no effect.

(2) A Disputes Tribunal has jurisdiction despite a provision in any contract that provides for –

(a) the submission to arbitration of any dispute or difference arising under that contract; or

(b) the making of an award upon such a submission to be a condition precedent to any cause of action accruing to a party to that contract.

As with residential tenancies, it seems sensible to try to work through problems as best you can before commencing legal action.

You can bring a case before the Motor Vehicle Disputes Tribunal by making an application to that Tribunal. The Tribunal then refers your application to the other party involved and asks that other party to discuss the matter with you and report back to the tribunal on whether or not a settlement is reached. The matter could progress to a hearing in the Tribunal if settlement is not reached.

See the motor vehicle disputes tribunal pages for more.

When there is no response

A more forthright approach may be called for if a party does not respond to first attempts to raise a problem. That could involve a threat of litigation or, if a debt is owed, leveraging security, credit reporting or making a statutory demand under section 289 of the Companies Act 1993.

Leveraging security

‘Leveraging security’ can mean selling assets or taking bond money. Any assets would have to be given as security first though, and they could only be sold in accordance with the terms of whatever security agreement was made.

Mortgages and charging orders can secure real estate and give you power to sell in circumstances regulated by the applicable laws and any agreed terms. The Property Law Act 2007 relates to mortgagee sales and the High Court Rules relate to sale of property charged with a charging order.

A charging order is an order of a court that secures payment of a judgment debt. Charging orders can be registered on titles to real estate but they can also be made in relation to other assets. The High Court can make a charging order before judgment is actually given or on an interim basis. The District Court has a more restricted jurisdiction in relation to charging orders, and the Disputes and Tenancy Tribunals do not have jurisdiction at all.

The Personal Property Securities Act 1999 relates to security agreements for moveable assets. Those are described as personal property. The Personal Property Act relates to the repossession and sale of secured assets. It also regulates how sale proceeds are to be divided up between others with security in the same asset.

If your debtor is a company then your security agreement may entitle you to appoint a receiver. The Receiverships Act 1993 relates to receiverships.

How to go about appointing receivers or selling secured assets is beyond the scope of this text. However, it may be worthwhile to consider the potential risks and rewards as well as costs and benefits before commencing any action to leverage security. That would necessarily involve weighing costs against potential returns and risks of resistance and retaliation. See the part ‘if there is (still) no response to any threat, demand, or other action’ below for the kinds of considerations you may want to take into account

It may be that you would consider it worthwhile to make a threat to leverage security before going any further. In that case refer to the ‘threat of litigation’ part that follows (albeit as applied to leveraging security rather than litigation).

Credit reporting

Listing a debt with a credit reporting agency may put pressure on your debtor to account to you for that debt. Whether you can actually list a particular debt is a matter for the agency in question.

As with leveraging security, it may be worthwhile to consider potential risks, rewards, costs and benefits before taking this step, and equally worthwhile to consider making a threat of credit reporting before going further. See the chapter ‘if there is (still) no response to any threat, demand, or other action’ below for more on analysing your options, and ‘threat of litigation’ in relation to threats of credit reporting (albeit as applied to credit reporting rather than litigation).

Threat of litigation

A threat of litigation may be appropriate where there is no security to leverage or where leveraging security has not resolved the problem (i.e. where proceeds of a mortgagee sale are not enough to pay off the debt secured by the mortgage).

The point of a threat of litigation is to warn of potential litigation and thereby create an opportunity to avoid it. It can be in the interests of all involved to avoid litigation if possible because of the potential risks and costs involved.

An effective threat of litigation normally includes four things:

1. clearly identify the problem;

2. demand a remedy within a specified timeframe;

3. threaten litigation if the demand is not complied with; and

4. make reference to the potential costs and/or claim for costs if litigation commences.

So there is a kind of carrot and stick approach where there is an incentive to meet the demand and a penalty otherwise.

It may be appropriate to describe the legal basis of the court case that may be brought, which court you would go to and which remedies you would claim. You may say you would claim damages plus legal costs and interest for instance. You might also be able to name specific figures or other relief that would be claimed, and if so it may prove worthwhile to communicate those figures or relief. That is because they may help the other party understand what is being argued over, and the figures could be used as reference points in any settlement negotiations that follow.

See those parts of this text that relate to jurisdiction and remedies in order to identify which court you might need to go to. You should also consider taking advice about your legal position and the kind of remedies available in particular. Legal advice can often prove especially valuable in relation to those.

Caution against blackmail

It is important to recognise that you would only be threatening a civil case for a civil remedy. You would not be threatening to go to the police unless the other party does what you are asking. That may amount to blackmail, and blackmail is a crime.

Section 237 of the Crimes Act 1961 provides:

(1) Everyone commits blackmail who threatens, expressly or by implication, to make any accusation against any person (whether living or dead), to disclose something about any person (whether living or dead), or to cause serious damage to property or endanger the safety of any person with intent –

(a) to cause the person to whom the threat is made to act in accordance with the will of the person making the threat; and

(b) to obtain any benefit or to cause loss to any other person.

(2) Everyone who acts in the manner described in subsection (1) is guilty of blackmail, even though that person believes that he or she is entitled to the benefit or to cause the loss, unless the making of the threat is, in the circumstances, a reasonable and proper means for effecting his or her purpose.

(3) In this section and in section 239, benefit means any benefit, pecuniary advantage, privilege, property, service, or valuable consideration.

Claiming legal costs

Different forums deal with legal costs differently.

It is generally expected that, where a judgment is given in an Employment Relations Authority, District Court or High Court case, the losing party will have to pay legal costs to the successful party. Costs are awarded at the discretion of those forums however, so they cannot be assured.

A party may have agreed in contract to pay the actual legal costs of the other if successfully sued. The District Court and High Court may award actual costs in accordance with such agreement so long as they are reasonable. Actual legal costs are less likely to be awarded where there is no contract for them, and those Courts will often apply a formula intended to result in an award that is two thirds of the costs actually incurred by the successful party.

The jurisdiction of the Disputes Tribunal, Motor Vehicle Disputes Tribunal and Tenancy Tribunal to award costs is much more restricted. The default position is that costs will not be awarded.

Awards of costs are addressed in more detail in those parts of this text that relate to each particular court or tribunal.

Claiming interest

If the parties have specified some rate of interest in a contract then that rate may apply to monies due under that contract. Interest clauses may be unenforceable for a variety of reasons however, and any default rules may be applied as an alternative.

Interest in the High Court, District Court and Disputes Tribunal

If the High Court, District Court or Disputes Tribunal makes an order requiring one party to pay money to another, then they can award interest on that money also. The interest can run from the date when the cause of action for the money arose until the date when the order for that money is made. Currently, interest awarded cannot be more that 5% per year. The relevant law is the Clause 4 of the Judicature (Prescribed Rate of Interest) Order 2011, the District Courts (Prescribed Rate of Interest) Order 2011, and the Disputes Tribunals (Prescribed Rate of Interest) Order 2011.

Interest in the Employment Relations Authority

Section 11 of Schedule 2 of the Employment Relations Act 2000 provides:

(1) In any matter involving the recovery of any money, the Authority may, if it thinks fit, order the inclusion, in the sum for which judgment is given, or interest at the rate prescribed under section 87(3) of the Judicature Act 1908, on the whole or part of the money for the whole or part of the period between the date when the cause of action arose and the date of payment in accordance with the determination of the Authority.

(2) Without limiting the Authority’s discretion under subclause (1), in deciding whether to order the inclusion of interest, the Authority must consider whether there has been long-standing and repeated non-compliance with a demand notice.

The rate prescribed under section 87(3) of the Judicature Act 1908 has been amended by the Judicature (Prescribed Rate of Interest) Order 2011, and currently sits at 5% per year.

Interest in the Motor Vehicle Disputes Tribunal

The jurisdiction of the Motor Vehicle Disputes Tribunal to award interest is not expressly provided for in the Motor Vehicle Sales Act 2003. Section 89(1)(b) gives jurisdiction to make any order that a court or the Disputes Tribunal may make in relation to specified sections of specified Acts. Namely:

(b) make any order that a court or a Disputes Tribunal constituted under the Disputes Tribunals Act 1988 may make under, –

(i) in the case of proceedings under the Sale of Goods Act 1988, section 53 of that Act; or 

(ii) in the case of proceedings under the Fair Trading Act 1986, section 43(2) of that Act; or

(iii) in the case of proceedings under the Consumer Guarantees Act 1993, section 39 or 47 of that Act; or

(iv) in the case of proceedings under the Contractual Remedies Act 1979, section 9 of that Act.

Consequently, the Motor Vehicle Disputes Tribunal may award interest where it orders a party to pay money to another in accordance with those sections of the Acts described. That is because a court may make an order for interest on money from the time of the cause of action to the time of judgment. The reasoning is that the money was properly due from the time the cause of action arose, and interest would compensate the successful party for being deprived of it while matters worked their way through the court system.

Interest in the Tenancy Tribunal

Jurisdiction for the Tenancy Tribunal to award interest is not expressly provided for either. Section 78(1)(d) of the Residential Tenancies Act 1986 gives jurisdiction to make an order that a party pay money to another. Subsection (h) provides the Tribunal may also make “any other order that the High Court or District Court may make under any enactment or rule of law relating to contracts”. Those Courts may order a party to pay damages for breach of contract and, as above, interest on damages as well

Statutory demands

A statutory demand is a formal demand for payment on a company or other corporation that is made in accordance with section 289 of the Companies Act 1993. It may follow a threat of litigation (or threat of a statutory demand) although it is often more efficient to use the demand as a substitute. That is because the demand is a kind of threat of litigation itself, albeit that there is less of an opportunity to avoid litigation if there is some dispute about the existence of the debt.

Section 289 Companies Act 1993 provides:

(1) A statutory demand is a demand by a creditor in respect of a debt owing by a company made in accordance with this section.

(2) A statutory demand must –

(a) be in respect of a debt that is due and is not less than the prescribed amount; and

(b) be in writing; and

(c) be served on the company; and

(d) require the company to pay the debt, or enter into a compromise under Part 14, or otherwise compound with the creditor, or give a charge over its property to secure payment of the debt, to the reasonable satisfaction of the creditor, within 15 working days of the date of service, or such longer period as the court may order.

The minimum “prescribed amount” of a statutory demand is $1,000. This is as provided by section 5 of the Companies Act 1993 Liquidation Regulations 1994.

A statutory demand should not be issued if there is a genuine and substantial dispute about the existence of the debt. That is because the demand would amount to an abuse of process in those circumstances. See Taxi Trucks Ltd v Nicholson [1989] 2 NZLR 297.

The basic rule is that if a debt is disputed then it should be resolved in the ordinary course. You are not allowed to shortcut the court process or other dispute resolution process by issuing a statutory demand. To try to shortcut a process in that way would amount to an abuse.

Section 290 of the Companies Act 1993 provides:

(4) The court may grant an application to set aside a statutory demand if it is satisfied that –

(a) there is a substantial dispute whether or not the debt is owing or is due; or

(b) the company appears to have a counterclaim, set-off, or cross-demand and the amount specified in the demand less the amount of the counterclaim, set-off, or cross-demand is less than the prescribed amount; or

(c) the demand ought to be set aside on other grounds. 

(5) A demand must not be set aside by reason only of a defect or irregularity unless the court considers that substantial injustice would be caused if it were not set aside.

(6) In subsection (5), defect includes a material misstatement of the amount due to the creditor and a material misdescription of the debt referred to in the demand.

The situation is somewhat different when a dispute is not genuine or substantial. The High Court does not require creditors to go through a dispute resolution process without good reason. So the Court may dismiss an alleged dispute summarily if it is satisfied that there is no real question to be tried. Factors that the Court may consider when deciding whether there is a real question to be tried includes whether the evidence of an alleged dispute:

1. conflicts with undisputed documentary evidence;

2. conflicts with other statements made by the same witness or ‘deponent’; or

3. is inherently improbable.

The High Court is entitled to take a robust and realistic approach where the facts justify that course of action.

It would be for the High Court to decide whether an alleged dispute is genuine or substantial because that is the court you would have to go to if you wanted to set aside a statutory demand. Debtors often argue statutory demands should be set aside because they have a genuine and substantial dispute, and it is up to the High Court to decide whether that is actually the case.

Section 287 of the Companies Act 1993 causes a debtor to be presumed insolvent unless it either complies with a statutory demand or otherwise applies to set it aside within 10 working days of the demand being served. If the debtor does not comply within time or successfully set the demand aside then it risks being put into liquidation.

‘Liquidation’ is when a ‘liquidator’ is appointed to take over the affairs of a corporation. It often results in the liquidated corporation being wound up or finished. It is a kind of death for a corporation, so the risk of liquidation over a debt provides a strong incentive to either pay the amount claimed by a statutory demand or otherwise fight that demand.

Finally, a statutory demand is of course pointless where a debtor corporation is already in liquidation. In that case you would pursue your debt under the rules that relate to corporations in liquidation.

So the criteria for when you can issue a statutory demand are:

1. You must be owed a debt of $1,000 or more.

2. The debt must be owed by a corporation.

3. The corporation must be incorporated and not in liquidation.

4. The debtor must not have a set off that is the same as or more than the amount being claimed.

5. There must not be a genuine and substantial dispute about the existence of the debt.

If there is (still) no response to any threat, demand or other action

If you do not receive any response to any threat, demand or other action such as leveraging security, then it might be worth assessing risks, rewards, costs and benefits of the options available to you before going any further. It may prove worthwhile to have a lawyer help you with this.

The particular options that are available would depend on the particular problem you have. Generally, however, your options may include:

1. Abandoning the matter altogether.

2. Making further demands, threats of litigation or repeating other action already taken.

3. Attempting to negotiate or engage in alternative dispute resolution.

4. Giving up control over your part of the problem or taking over other parts.

5. Commence litigation.

Other options may of course be available depending on the particular problem. Employees, for example, may be able to raise a personal grievance. See the parts of this text that relate to particular kinds of problems for more, but note that this text may not address all options available in every circumstance. Again, legal advice could be particularly valuable here.

Abandoning the matter

This option would involve you simply walking away from the problem and,   presumably, putting the matter to rest. This may be appropriate where the risks of further action outweigh the probable rewards, or where the likely costs would not justify the benefits to be had. If the other party is probably insolvent, for example, then you may form the view that pursuing the matter any further would be throwing good money after bad.

Repeating other action already taken

Here you would repeat action already taken, such as making a demand or threat of    litigation. If these steps were not particularly effective the first time around then it may be difficult to see why you should repeat them unless something has changed.

Attempting to negotiate or engage in alternative dispute resolution

It is difficult if not impossible to negotiate with someone who is not responding to you, although there may be some obligation on you to make an attempt.

It may also be worthwhile to make a written offer to settle the matter for something less than all you may be legally entitled to. Such an offer may be called for where the potential rewards of litigation or other action are somewhat marginal when compared with the potential risks, or where further action is not attractive for other reasons.

You may find that an offer to settle for a discount would promote negotiation, but if not then it could improve your position on a claim to costs if the matter were to proceed further. See the settlement page for more.

As with negotiation, it is difficult if not impossible to compel an unresponsive   party to engage in an alternative dispute resolution process. However, you may   find that there is some obligation on you to at least make an attempt. There may be a clause in a relevant contract that requires you to attempt alternative dispute resolution such as mediation before commencing litigation or other action. See the pages on alternative dispute resolution for more detail.

Giving up control over your part of the problem or taking over other parts

These kinds of options can be overlooked sometimes. There can be a variety of different ways to give up your part of the problem or take over other parts, including the following three options:

Option 1: Selling debt

If your problem is collecting a debt, then you may be able to sell the debt to someone. You would receive some value and the buyer would take over your collection problem.

Option 2: Buying out a company

If your problem is with a company then you may be able to buy out that company and resolve the problem upon taking control.

Option 3: Winding up an organisation

This is a fairly extreme solution that may be available to you if your problem belongs to a company of yours rather than belonging to you personally. It would involve putting your company into the hands of liquidators, who may resolve the problem in the course of winding up the company. That you would have to wind up your own company is an obvious potential drawback. Legal advice and accounting advice may be worthwhile when considering this option.

Commencing litigation

Litigation is often regarded as the final resort because it is the most costly and risky option. Your litigation options would depend on the kind of problem you have and the remedies you would like to achieve.

See those parts of this text that relate to jurisdiction and remedies in order to identify which court you might need to go to. You should also consider taking advice about your legal position and the kind of remedies available in particular. Legal advice could be especially valuable in relation to those.

Assessing risks and rewards

A risk / reward analysis involves first identifying the risks involved in a particular option and the potential rewards that option has to offer. Then you weigh up the risks against the rewards to help you decide whether the option is one that you would like to take. Legal advice could be worthwhile to help you with this assessment.

Obvious potential rewards or remedies can be everything you consider you are entitled to. However, sometimes you may have several different kinds of remedies available to you but can chose only one. Kinds of remedies can compete with one another or be mutually exclusive. You may not be entitled to several different remedies at once if that would involve ‘double dipping’.

Common risks include:

1. That you might lose your case or otherwise find out you are not actually entitled to everything you think you are.

2. You may not be awarded costs, less costs than you hoped or even end up with a costs award against you.

3. You may face retaliation such as a counterclaim.

4. You may face negative publicity.

5. The dispute might become more expensive than you thought at first. This can happen when another party makes allegations that cause complications.

6. You may not recover all that you are entitled to even if you win your case. For example, if the defendant is insolvent then it may not be able pay the amount of a judgment in your favour. See pages dealing with enforcement for more.

Assessing costs and benefits

This is can be a fairly straightforward commercial type of assessment if you consider ‘costs’ and ‘benefits’ in simple money terms: If your irrecoverable costs would be the same as or greater than the benefits of any further action then it may not be sensible to take matters any further.

‘Irrecoverable costs’ means those costs that you would probably not recover from anyone else if you were to take the matter further. There is some overlap with the litigation risk assessment here. The most obvious risk being that you could end up throwing good money after bad. See those parts of this text that deal with costs for some idea of the costs that may become associated with your particular problem, what portion of those may be recoverable and what portion may not be.

‘Costs’ and ‘benefits’ can mean more than just money though: They can include things like reputation, relationships and the certainty that comes with setting a legal precedent. Creditors, for example, may want to avoid a reputation for being soft on their debtors and chose to litigate even though the financial costs might end up outweighing the financial benefits. Similarly, businesses that use the same standard contracts for a great many deals might chose to litigate in order to establish how those contracts should be interpreted (and thereby achieve some certainty about that).

A lawyer could help you to quantify the immediate financial aspects of any further action, but might not be well placed to help weigh up other items such as reputation in a particular marketplace or relationships with particular businesses or consumers.

Information to be assessed

What is relevant to any assessment will usually depend on your particular situation. Some information that is usually worth taking into account includes:

Consideration 1: The strength of your position

It might not be wise to take a matter further if you cannot make out a claim in law or prove it with evidence. A decision can be more difficult where the law and the evidence is unclear. It could be worthwhile to invest in legal advice about this.

Consideration 2: The solvency of parties

If a party is insolvent unable to pay you or ‘insolvent’ then there might be little point in proceeding further. You could be throwing good money after bad.

You can check whether a corporation is in liquidation, receivership or struck off by looking it up on the companies office website: Similarly, you can check whether a natural person is or has been bankrupt on the website for the insolvency and trustee service:

A party if obviously insolvent if it is currently in liquidation or bankruptcy. Whether the party is insolvent or about to become insolvent but has not yet been put into liquidation or bankrupted is more difficult to figure out. A credit check or search for securities may help but cannot be taken to be complete or conclusive on their own. Just because a party has given an asset as security does not necessarily indicate anything about its financial position. Uncertainty is something to be factored into a risk assessment.

Searching for securities

Security can be given over real property and personal property there are government registers of both.

Real property

‘Real property’ means land or real estate. Mortgages can be registered against land, as can charging order and caveats. These can be called ‘encumbrances’ or ‘instruments’. All operate to secure the real estate for whomever registered them.

Titles to real estate, registered proprietors and encumbrances are recorded electronically on a system maintained by Land Information New Zealand. The system is called Landonline, and it is available to registered users such as lawyers and conveyancers.

A lawyer or conveyancer registered to use Landonline may be able to search that system for property registered to (and securities registered against) the party you have a problem with, or otherwise Land Information New Zealand itself may be able to help you:

If the party you have the problem with owns ‘unencumbered’ real estate then they probably have some equity they could use to pay you. See the parts of this text dealing with enforcement if you remain unpaid despite a determination in your favour. It may be that you could first secure and then sell the real estate in order to get paid.

Personal property

‘Personal property’ means assets that are not real estate such as vehicles, equipment, shares and money. You can find out whether a party has given security over personal property by searching the Personal Property Securities Register run by the companies office:     

Consideration 3: Locating parties

Natural persons can sometimes be difficult to locate. You should not have the same problem with a company or other incorporated entity because they have to provide address details on the relevant registers. See

However, upon searching the appropriate register you may find that the incorporated entity has been ‘struck off’. Struck off entities no longer exist, so you could not take any further action against them. You may be able to apply to revive the entity and reinstate it to the register so that you can proceed, but that is beyond the scope of this text.

You can face a similar problem with natural persons who have passed away and where their estate has been distributed. Otherwise you may not be able to find someone because he or she does not want to be found. It could be pointless to incur the costs of commencing action only to find that you cannot proceed further because you cannot serve a party or, if you obtain an order for substituted service, because you would probably not be able to effectively enforce any judgment against them. See the pages of this website that deal with service and substituted service for more detail.

If you cannot easily locate a party then you could consider engaging a ‘skip tracing’ agency or otherwise a private investigator to find him or her for you. Some skip tracing agencies conduct their business from their offices, gathering data and phoning known associates of the ‘subjects’ they are attempting to locate. You might expect private investigators, on the other hand, to leave their offices and go out ‘into the field’ where office-based searches are insufficient.

Consideration 4: Locating assets

As with parties, if you want to take action against a specific asset then you might want to find out where it is first. You may regret obtaining a New Zealand court order for possession of something only to find out it is somewhere in Columbia. It might have been more efficient to file your court case where you expected to enforce a judgment. Or perhaps abandon the matter altogether if enforcement prospects were not good and the risk of not being able to enforce could not justify the potential rewards.

A private investigator may be able to help you to locate specific assets if you have difficulty doing so yourself. If security is registered against the asset then the Personal Property Securities Register may be of some assistance. See If the asset is land then see the part that deals with ‘real property’ above.

When an argument is raised

If a party responds to your first attempts to resolve a problem by arguing with you then you should identify your options and assess the costs, benefits, risks and rewards of each. You may need to investigate the merit of the argument before you could complete those assessments and make an informed decision.

Your options may include:

1. Abandoning the matter altogether. See the ‘abandoning the matter’ part of chapter addressing options under the heading ‘if there is (still) no response to any threat, demand, or other action’ above for more about this.

2. Making a threat of litigation, ‘Calderbank’ offer and/or attempt to negotiate a settlement. See the ‘threat of litigation’ and settlement parts of this website for more.

3. Leveraging security. See the part of this text dealing with ‘leveraging security’ above for more.

4. Credit reporting. See the part of this text dealing with ‘credit reporting’ above for more about this option.

5. Issuing a statutory demand. See the part titled ‘statutory demands’ above for information about this option.

6. Attempting to engage in alternative dispute resolution such as mediation, conciliation or arbitration. See the pages about alternative dispute resolution for more detail about the various alternatives to resolve disputes other than through litigation.

7. Giving up control over your part of the problem or taking over other parts. See ‘giving up control over your part of the problem or taking over other parts’ under the heading ‘if there is (still) no response to any threat, demand, or other action’ above for more about this.

8. Commencing litigation. See those chapters dealing with litigating in various forums for more on this option. Keep in mind that this is not a comprehensive text dealing with every available forum and option. Forums addressed include:

8.1.      Disputes Tribunal

8.2.      District Court

8.3.      Employment Court

8.4.      Employment Relations Authority

8.5.      High Court

8.6.      Motor Vehicle Disputes Tribunal

8.7.      Tenancy Tribunal

Regarding some of the matters you should take into account when considering your options, see those parts of this text above under the headings ‘assessing risks and rewards’; ‘assessing costs and benefits’; and ‘information to be assessed’.

Note: This content was originally published by in 2015. Disclaimer