Civil litigation basics: enforcing court judgments
If you have been through a court process and received an order that a defendant needs to pay you money, you may wonder what your options are if the defendant does not comply with the order. Or, you may be defendant who has just been ordered to pay and are wondering what will happen if you do not comply? This article will help guide you on how to enforce a court judgment, and the consequences of a party failing to do as ordered.
Enforcing a court judgment means taking legal action to ensure that the judgment is carried out as ordered by the court. This is necessary when the losing party in a lawsuit fails to comply with the court’s decision or order. Often, the judgment will be an order to pay a sum of money, so that’s what this article will cover.
The enforcement processes contained in the District Court and High Court rules involve several steps, which may include taking funds from wages or bank accounts, seizing assets or property, or placing charging orders on property (which prevent property from being sold without the debt owing being paid). The goal is to ensure that the winning party receives the compensation or remedy that they are entitled to under the court’s decision.
The Ministry of Justice has helpful information available on its website regarding civil debt and how to collect it here: https://www.justice.govt.nz/fines/about-civil-debt/
The main choice which a judgment creditor (i.e. the winning party due to receive money under the order) often needs to make is whether to use one of the enforcement processes provided in the rules of the District Court or High Court or simply take steps to bankrupt the judgment creditor.
The threat of bankruptcy can be used as a strategic tool to enforce a court order for the payment of money in certain circumstances. Bankruptcy comes with severe consequences and debtors can often be more motivated to come up with money to avoid going bankrupt than by being threatened with the sale of some specific property or the taking of sum of their wages. Find out more about bankruptcy here.
However, there are several potential benefits to seeking to enforce a court order for payment through an enforcement process other than bankruptcy of a judgment debtor (i.e. the party due to pay money under the court order), including:
- Increased chances of collection – Enforcing a court order for payment through non-bankruptcy means may increase the chances of actually collecting the judgment debt. In bankruptcy, the debtor’s assets and debts are typically subject to the bankruptcy process, and the debtor’s available assets may be distributed among multiple creditors. On the other hand, pursuing enforcement through other means, such as wage garnishment or sale orders may allow the judgment creditor to directly access the debtor’s assets and recover the owed amount.
- Faster collection – Bankruptcy proceedings can sometimes be lengthy and complex, involving multiple steps, court hearings, and administrative processes. Enforcing a court order through non-bankruptcy means may generally be faster, allowing the judgment creditor to collect the owed amount more quickly.
- More flexibility – Non-bankruptcy enforcement methods may provide greater flexibility in the collection methods available to the judgment creditor. For example, a judgment creditor may be able to pursue wage garnishment, bank levies, property liens, or other means to collect the debt. This flexibility allows the judgment creditor to choose the most effective and appropriate method for collecting the debt based on the debtor’s specific circumstances.
- Preservation of other legal remedies – Pursuing enforcement through non-bankruptcy means may also allow the judgment creditor to preserve other legal remedies. For instance, if the debtor has assets that are not subject to bankruptcy, such as real estate or non-exempt personal property, the judgment creditor may be able to pursue those assets for collection, while also reserving the right to pursue other legal remedies, such as additional lawsuits or charging orders, if necessary.
- Control over the collection process – Non-bankruptcy enforcement methods generally allow the judgment creditor to maintain greater control over the collection process. The judgment creditor can initiate and manage the enforcement process, and may have more control over the timing, method, and outcome of the collection efforts, compared to the bankruptcy process, which is overseen by the Official Assignee once a debtor is declared bankrupt.
Enforcing a court judgment can be a complicated and time-consuming process whether through pursuing bankruptcy proceedings or otherwise, and may require the assistance of a lawyer. However, it is an important step in ensuring that justice is served and that parties are held accountable for their actions.
Alternatively, from the perspective of a judgment debtor, there may be valid reasons why a judgment creditor should be stopped from enforcing their judgment due to some particular circumstances. There are various methods by which a judgment debtor can obtain what is called a stay of enforcement.
How can we help?
WRMK Lawyers’ experienced litigation team understand the challenges that judgment creditors and debtors face and the complex legal landscape involved in enforcing court orders. Our team of skilled lawyers can provide you with comprehensive and strategic legal solutions to help you collect the money you are owed. You can view our team here.
WRMK Lawyers takes all reasonable care to make sure that the information in this article is up-to-date and accurate at today’s date. It is necessarily general information and not intended as legal advice to be relied upon.
Our thanks to Nick Coyle for writing this article.