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Overview (March 2008) - International Law Office

International Law Office

Litigation - New Zealand

Overview (March 2008)

March 11 2008

Personal Injury Liability: Accident Compensation
Exemplary or Punitive Damages
Consumer Protection Legislation
Contract Reform Legislation
Bill of Rights Act
Court Processes
Enforcing Foreign Judgments

The New Zealand legal system is based on the common law and has its roots in English law. In 1908 New Zealand imported into its legal system all of the statutes that existed in England on January 14 1840.

However, New Zealand has since developed its own statute and case law which, although similar to English law, differs in a number of important respects. The development of New Zealand case law has been heavily influenced by decisions from higher courts in other common law jurisdictions, particularly England, Australia and Canada.

Personal Injury Liability - Accident Compensation

The most unusual feature of the New Zealand legal system is its accident compensation legislation, which bars most forms of personal injury litigation.

With certain special exceptions and qualifications, the accident compensation scheme essentially provides a system of state compensation for people who suffer accidental personal injury, irrespective of whether the injury is suffered at work, in a traffic accident, at home or elsewhere, and irrespective of whether it was the fault of the injured person or another party. The injured person may not initiate litigation, but must file a claim with the Accident Compensation Corporation. The scheme provides cover for accidents suffered on a 'no fault, no blame' basis. Where legislation provides cover for personal injury or death, no civil claim for compensation may be brought in the courts.

The statutory bar to proceedings means that no civil liability applies for most personal injuries. The bar to civil claims protects not only the party that caused the injury, but also any indemnifier of that party. The bar prevents claims not only by the person injured, but also by the corporation after it has paid compensation to the injured person - it cannot bring subrogated claims against the party that caused the injury.

The bar prevents claims if cover exists, irrespective of the amount of compensation which the injured party receives. The scheme operates on the basis that a person who has cover under the act is entitled to compensation under the act, irrespective of the value of the cover, but is not entitled to compensation from the party that caused the injury.

Certain exceptions exist to the statutory bar on civil actions for personal injury. Claims for exemplary damages only may be pursued because they are not compensatory in nature. In addition, claims for some forms of medical misadventure and, in some circumstances, for nervous shock or mental injury may be pursued because of limitations in the extent of the statutory cover. However, such claims remain rare in practice.

Exemplary or Punitive Damages

As in many other common law countries, New Zealand courts may award a plaintiff an amount intended solely to punish the defendant for outrageous conduct. Such exemplary damages are in addition to what is necessary to compensate the plaintiff for loss. In spite of the accident compensation procedural bar to pursuing compensatory damages for personal injury, claimants may pursue and obtain a purely punitive or exemplary award.

New Zealand case law on exemplary damages is otherwise generally derived from English law, but it is less restrictive in terms of the circumstances in which an award may be made. However, the courts have shown their determination to keep exemplary damages awards relatively small - the highest exemplary damages award by a New Zealand court is NZ$85,000, although settlements for higher sums have been agreed.

Consumer Protection Legislation

The Fair Trading Act 1986, which is based on provisions of the Australian Trade Practices Act 1952, covers misleading and deceptive conduct in trade, trade descriptions, unfair practices, consumer information and product safety. Liability is strict; therefore, the breach may be innocent. The type and amount of any civil remedy are discretionary.

The Consumer Guarantees Act 1993 applies to the supply of goods or services which are intended for ordinary household use. The act provides consumers with a number of implied guarantees as to quality and fitness for purpose. It imposes obligations on sellers and manufacturers and provides a number of remedies that enable the consumer to pursue the manufacturer or seller of the goods or services.

Contracting out of either the Fair Trading Act or the Consumer Guarantees Act is prohibited in most circumstances. New Zealand has no legislative equivalent to England's Unfair Contract Terms Act.

Contract Reform Legislation

A number of statutes modify the common law approach to contractual relationships.

The Contractual Remedies Act 1979 removes the distinction between contractual terms that constitute conditions and those that constitute warranties. Instead, the act deals with breach and substantial breach. The act allows a party to recover damages in contract (assessed as if the representation were a term of the contract for a misrepresentation which induced the contract, irrespective of whether the misrepresentation was innocent, negligent or fraudulent. Therefore, the act removes the old common law and equitable remedies for misrepresentation between contracting parties. The act also governs the circumstances in which a party is entitled to cancel a contract. Cancellation of a contract results in all parties being relieved from further performance, but the act also provides the courts with broad discretionary powers to grant remedial relief to a party to prevent injustice when a contract is cancelled.

The Contractual Mistakes Act 1977 and the Illegal Contracts Act 1970 largely codify the established common law rules relating to contracts which are entered into by mistake or contrary to law. However, both statutes give the courts broad discretion to grant remedial relief in respect of contracts subject to the acts.

Bill of Rights Act

The New Zealand Bill of Rights Act 1990 is an ordinary act of Parliament that is subordinate to other legislation where express inconsistency arises. The act contains a list of rights and freedoms which are affirmed. The act cannot operate so as to strike down inconsistent legislation. Instead, it is used by the courts as an aid to interpretation of legislation. Where another act can be read in two ways, one being consistent with the Bill of Rights Act and the other not, the interpretation which is consistent will prevail.

Court Processes

The multi-tiered civil court system is structured as follows:

  • Claims for less than NZ$7,500 (or NZ$12,000 with the consent of both parties) are heard by the Disputes Tribunal. The tribunal is a small claims forum where laypeople decide the dispute. Lawyers may not appear and matters are resolved based on broad principles of fairness and justice, rather than according to ordinary legal principles.
  • Claims for damages under NZ$200,000 are commenced in the District Court.
  • Claims for higher amounts are commenced in the High Court, which is also the appellate court from the District Court.
  • The High Court exercises jurisdiction in Admiralty in addition to its general jurisdiction.
  • Appeals against High Court decisions are heard by the Court of Appeal.
  • Final appeals from the Court of Appeal may be heard by the Privy Council in the United Kingdom (for cases in which a decision was issued before December 31 2003) or by the Supreme Court of New Zealand (for subsequent decisions).

New Zealand also has a specialist Family Court, Environment Court and Employment Court and Tribunal.

Court processes closely resemble those of England and Australia. Pre-trial discovery is limited to document discovery - which proceeds according to concepts of relevance similar to those in England - and interrogatories answered on affidavit. Witnesses are not deposed in civil trials. With a few exceptions, civil cases are determined by a judge sitting without a jury.

Since 1994 the courts of New Zealand have, to varying degrees, implemented case management systems which promote the prompt and economic disposal of cases and which have the effect of removing control of the process from the parties. In Auckland, the system is well established and ensures that regular conferences are held and timetable orders are made and met. Case management systems ensure that cases receive regular judicial attention and are dealt with expeditiously. Most cases are finally disposed of within one or two years of proceedings being initiated.

Successful litigants are usually entitled to a contribution to their legal costs. The amount awarded is a matter of judicial discretion. Despite a change in the court rules which provides for a new approach to costs awards and aims to raise recovery to 60% (based not on actual costs, but on a notional reasonable cost as assessed by the court), a costs award, generally speaking, covers approximately 25% to 50% of the legal costs incurred by the successful litigant.

Enforcing Foreign Judgments

A party with a foreign court judgment against a New Zealand resident or an owner of assets in New Zealand may be able to enforce the judgment in New Zealand. In addition, a foreign judgment may be used as a defence to a New Zealand court action or pleaded as being conclusive of an issue in an action.

The three methods of enforcing foreign judgments are:

  • reciprocal enforcement under statute;
  • enforcement of Commonwealth judgments under statute; and
  • enforcement under the common law.

The appropriate method depends on the country in which the foreign judgment was given:

  • If the judgment was issued in a country with which New Zealand has a reciprocal agreement,(1) it may be enforceable under the Reciprocal Enforcement of Judgments Act 1934.
  • A judgment issued in a Commonwealth country is enforceable under the Judicature Act 1908, provided that the judgment is for a sum of money.
  • A judgment from another country is enforceable at common law in New Zealand.

For further information on this topic please contact Chris Browne at Wilson Harle by telephone (+64 9 915 5700) or by fax (+64 9 915 5701) or by email (chris.browne@wilsonharle.com).


(1) Australia, Botswana, Belgium, Cameroon, England, Fiji, France, Hong Kong, India, Malaysia, Nigeria, Kiribati and Tuvalu, Lesotho, Norfolk Island, Northern Ireland, Pakistan, Papua New Guinea, Scotland, Singapore, Solomon Islands, Sri Lanka, Swaziland, Tonga, Wales, Western Samoa.

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