Kezia Milne & Alex Summerlee[i]
“The degree of confidence people have in the court system will influence their belief in the rule of law. If people cease to see courts as relevant, effective and accessible, they are less likely to believe that the rule of law means everyone is entitled to the benefits and protection of the law, including them and people like them.”[ii]
The Law Commission was correct when it wrote in 2004 that the rule of law depends in part on the court system being effective and accessible.
For civil disputes, the court rules are a key way by which this may (or may not) be achieved.
Lack of equivalence between the remedies and enforcement mechanisms available to the District Court and those available to the High Court are one way that civil litigation can be unduly complicated. Such discrepancies may, for example, require:
(a) litigants to choose a court based on whether a desired order is available (irrespective of the jurisdictional limit of the District Court); or
(b) the transfer of orders from the High Court and District Court so a party can obtain an appropriate enforcement order.
Two examples of these inconsistencies will be discussed in this article: pre-judgment charging orders under the High Court Rules 2016 and garnishee orders under the District Court Act 2016.
Pre-judgment charging orders
A charging order charges the estate, right, title or interest of the liable party in the property described in the order with payment of the amount for which the entitled party has obtained, or may obtain, judgment.[iii]
A charging order, among other things, prevents the charged land from being dealt with, much like a caveat.
A pre-judgment charging order is available where a party, with intent to defeat creditors, is:[iv]
(a) removing, concealing or disposing of his or her assets; or
(b) absent from or about to leave New Zealand.
Both the District Court and the High Court have jurisdiction to grant a charging order over property after judgment has been obtained. However, under the current court rules, only the High Court may grant a charging order before judgment (a pre-judgment charging order).
Being available pre-judgment, it is a useful remedy where a potentially liable party has real property against which a judgment could be enforced, by preventing that property from being dealt with. While similar to a freezing order, this security is perfected by being registered against the title to prevent dealings with the title. Consequently, and unlike a freezing order, it cannot be defeated by a bona fide purchase for value.
Unusually, there is no equivalent remedy available under the District Court Rules. Perhaps this is because of its functional similarity to a caveat. But, given that the threshold is high for obtaining such an order and given that the District Court can issue post-judgment charging orders, this is not a compelling reason for the District Court to lack the jurisdiction to make pre-judgment charging orders like the High Court.
Further, a pre-judgment charging order contemplates other issues to be litigated. There may be a variety of reasons why, all other things being equal, a plaintiff would litigate the substantive matter through the District Court. If that is the case, a plaintiff should not be compelled to go to the High Court purely because it is the only court where the plaintiff can obtain the security of a pre-judgment charging order.
Garnishee proceeding
The inverse issue exists in relation to garnishee proceedings.
Under s 180 of the District Court Act:
A person (A) who has obtained a judgment or order for the payment of money make take [a garnishee proceeding] under the rules to obtain—
(a) The payment to A of a debt owing or accruing to the judgment debtor from another person (B) and the costs of bringing the garnishee proceeding; and
(b) The payment to A of so much of the debt as will meet the amount of the judgment or order and the costs of bringing the garnishee proceeding.
Garnishee proceedings allow a judgment creditor to go directly to a third party who owes the judgment debtor money (often the judgment debtor’s bank) and require the third party to pay the judgment sum to the judgment creditor (to the limit of the amount that the third party holds to the credit of the judgment debtor).
A garnishee order is of particular use when, for example, the judgment sum is small and enforcement does not justify the expense of bankruptcy proceedings, or when there is a known source of funds held by third party which can be used to satisfy a judgment debt.
However, under the current rules, garnishee orders can be made only by the District Court.
Consequently, a party who obtains judgment in the High Court cannot avail themselves of a garnishee order unless they first apply to remove the High Court order into the District Court by filing a certificate of removal in the District Court.[v]
Only then can the judgment creditor commence garnishee proceedings. Although the plaintiff may be able to recover costs associated with the removal,[vi] the extra steps delay enforcement of the judgment debt and add unnecessary procedural complexity, needlessly exposing the judgment creditor to a greater risk of irrecoverable costs.
Presumably, the absence of jurisdiction arises because garnishee proceedings are generally used to collect smaller sums. But, that is not always the case. Further, the amount a party seeks to enforce through a High Court judgment (such as a costs order) may be a relatively small amount. If so, there is all the more reason that the integrity of the award should not be whittled away by further costs incurred removing an order to the District Court.
Summary
There are good reasons for many of the jurisdictional differences between the High Court and the District Courts.
However, not all of them make sense. Lack of equivalency around remedies, like pre-judgment charging orders, and enforcement procedures, like garnishee summons, adds a layer of obscurity to civil procedure. It can, for example, limit how litigants choose to conduct their case by requiring proceedings which would otherwise be properly conducted in the District Court to be brought in the High Court and vice versa.
It can also increase litigants’ costs by requiring applications to have an order removed from one court to another.
Issues, such as those discussed above, contribute to the financial barriers to civil justice that have been identified by the Rules Committee.[vii] These are two areas of the High Court Rules and District Court Rules which should be revisited and amended.
[i] Kezia Milne is a final year honours student at the University of Canterbury. Alex Summerlee is a civil litigation partner at Parry Field Lawyers in Christchurch and a member of the TLANZ Civil Litigation Committee.
[ii] Law Commission Delivering Justice For All: A Vision for New Zealand Courts and Tribunals (NZLC R85,2004) at 3.
[iii] High Court Rules 2016 r 17.40.
[iv] High Court Rules 2016 r 17.41.
[v] District Court Act 2016, s 122.
[vi] District Court Act 2016, s 122 (5).
[vii] Improving Access to Civil Justice (Rules Committee, November 2022).
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