1 May 2000
New Associate in Christchurch office
In particular new definitions or terms will become important. Legal
distinctions have been made, for example between a "True Security Interest" and a "Deemed Security Interest". Secured property will be
referred to as "collateral", the existence of a security interest is determined by its "Attachment" and/or "Perfection".
Registration is by a "financing statement", with "verification
Clearly the Act will have a significant impact on new security
interests created after it comes into force. However, a transitional period will affect existing securities. Current indications are
that all personal property securities, even if registered under existing registration law, will need to be registered under the PPSA.
The transitional period will be six months, from when the Act comes
Having decided to pursue the debt there are several options open to you... Disputes Tribunals are operated throughout the country from District Court offices and can resolve disputes concerning sums up to $7,500 (or $12,000 by agreement between the parties).
With such a lot at stake, it is important the information on the application be clear, concise, and correct. Although legal representation is specifically prevented in Disputes Tribunal matters, it may be money well spent, to have Caudwells prepare the Disputes Tribunal application for you. The Disputes Tribunal is presided over by a referee who must determine the dispute "according to the substantial merits and justice of the case" and have regard to the law, but is not bound to give effect to strict legal rights, obligations, forms or technicalities. This introduces some uncertainty into the process. However, a Tribunal decision is enforceable as a judgment of the District Court.
The District Court may determine claims worth up to $200,000.
If requesting payment from the debtor does not invoke payment, the next step is to issue District Court proceedings.
Summary judgment proceedings can be issued where the debtor has no defence to the creditor's claim and if the debtor doesn't defend
the proceedings, judgment will be entered and sealed, and enforcement
The High Court has the sole jurisdiction to determine disputes where the amount claimed is in excess of $200,000 and the procedures are essentially the same as for the District Courts. However, the scale of costs awarded in the High Court is considerably higher.
And finally, there is a Statutory Demand and Application for Liquidation.
Where the debtor is a company, and the debt exceeds $1,000 a Statutory Demand issued under Section 289 of the Companies Act 1993
can be issued and served on the company. The company has fifteen
Unfortunately, obtaining judgment against the debtor, will not
guarantee payment. Enforcing the judgment opens various options to the creditor.
The liability arises when a body corporate fails to pay wages or holiday pay, most likely when a company goes into liquidation. Wages and holiday pay are already a priority ranked debt on liquidation, but if there are insufficient funds to fully pay wages, employees could sue directors personally to recover the shortfall. It could be used to pressure a company to pay. Anyone bringing a wages claim could join a director to the claim because the company has failed to pay. It is not necessary to wait until the company is insolvent or in liquidation.
Who could be liable?
The person is liable only if they "directed, authorised, assented to, or acquiesced in the failure to pay". There is no express defence of reasonable and honest (but mistaken) belief that the failure to pay was lawful. The directors would normally be entitled to be reimbursed by the company, if they were properly acting in the course of their duties to the company, but that is small comfort if insolvency is the reason the company has not paid wages. The clause applies to directors, officers and agents of any body corporate. This includes companies, trusts, local authorities and incorporated societies.
What to do?