New Zealand Legal Environment – A summary of the major differences between the New Zealand legal system and other legal systems.

The New Zealand legal system is based on the common law and has its roots in English law. Its early colonial history (essentially) involved the wholesale transplantation of English law into the New Zealand context. Since that time, however, New Zealand has developed its own statute and case law which, although similar to English law, does diverge in a number of important respects. Despite that divergence, the development of New Zealand case law continues to be heavily influenced by decisions from higher courts in other common law jurisdictions, in particular, England, Australia and Canada.

Personal Injury Liability: Accident Compensation

One of the single most peculiar features of the New Zealand legal system is its accident compensation legislation, which bars most forms of personal injury litigation.

The scheme is premised on a societal exchange:

• Subject to some exceptions and qualifications, the state (funded through employer and other levies) provides compensation to those who suffer personal injuries, irrespective of whether the injury was suffered at work, on the roads, at home, or elsewhere. Compensation is provided on a “no fault" basis – it is not dependent upon the claimant establishing the fault of a third party.
• In return, those who have any cover for a personal injury under the scheme are barred from bringing a civil claim in respect of that personal injury. Instead, they must file a claim with the Accident Compensation Corporation.

The bar to civil claims protects not just the person who caused the injury but also any indemnifier of that person. 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 person who caused the injury.

There are exceptions to the statutory bar to civil actions for personal injury:

• Claims for some forms of treatment injury (formerly medical misadventure) and in some circumstances for nervous shock/mental injury may be pursued because of limitations in the extent of the statutory cover. Such claims remain rare in practice.
• Claims for exemplary damages only (because they are not compensatory in nature) may be pursued. As with many other common law countries, New Zealand courts may award to a plaintiff an amount intended to punish the defendant for outrageous conduct (exemplary damages). This is in addition to what is necessary to compensate the plaintiff for loss. Because of the accident compensation procedural bar to pursuing compensatory damages for personal injury, it is possible in such cases to pursue and obtain an award of damages which is purely punitive or exemplary.

Exemplary or Punitive Damages

New Zealand case law on exemplary damages is otherwise derived from English law but is less restrictive regarding the circumstances in which an award may be made. Although less restrictive in approach than English law and practice, awards of exemplary damages are relatively small and New Zealand courts have shown a determination to keep them modest. The highest amount of exemplary damages awarded by a New Zealand court is NZ$85,000, although settlements for higher sums have occurred, awards approaching that high water mark are rare.

Consumer Protection Legislation

The Fair Trading Act 1986 (which is based upon provisions of the Australian Trade Practices Act 1974) covers misleading and deceptive conduct in trade, trade descriptions, unfair practices, consumer information and product safety. Liability is strict (so the breach may be innocent or unintentional).  The type and amount of any awarded civil remedy is discretionary. While there is no legislative equivalent in New Zealand to the English Unfair Contract Terms Act, some consumer and small trade contracts are governed by the unfair contract provisions of the Fair Trading Act.

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 of quality and fitness for purpose. It imposes obligations on sellers and manufacturers and provides remedies that enable the consumer to pursue against the manufacturer or seller of the goods or services.

The Credit Contracts and Consumer Finance Act 2003 applies to credit and finance contracts. It provides consumer protection by imposing disclosure obligations on lenders. It also allows borrowers to apply for relief if (in certain circumstances) they suffer an unforeseen hardship and to apply to the court to vary contracts if borrower’s contract, conditions or behaviour is oppressive.

Contracting out of the Fair Trading Act or the Consumer Guarantees Act or the Credit Contracts and Consumer Finance Act is prohibited in most circumstances. 

Contract and Commercial Law Act 2017

For many years, there were a number of New Zealand statutes that reformed the common law approach to contractual relationships. Those statutes have now been consolidated in the Contract and Commercial Law Act. The Act:

• Removes the distinction between contractual terms that constitute conditions and those that constitute warranties. Instead, the act deals with breach and substantial breach.
• Allows a party to recover damages in contract (assessed as if the representation were a term of the contract) for a misrepresentation irrespective of whether the misrepresentation was innocent, negligent or fraudulent. The Act, therefore, removes the old common law and equitable remedies form is representation between contracting parties.
• 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 Contractual Remedies Act also provides the courts with broad discretionary powers to grant remedial relief to any party to prevent injustice when a contract is cancelled.
• Largely codifies established common law rules relating to contracts entered into by mistake or contrary to law. It confers on the courts a broad statutory discretion to grant remedial relief in respect of contracts subject to those provisions.

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 affirms the rights enumerated in Part 2. The Act does not 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. Its provisions will also be a mandatory consideration in some administrative decision making.

Court Processes

New Zealand has a multi-tiered civil court system.

• The Disputes Tribunal hears claims that do not exceed $30,000 in value. The Tribunal is a small claims forum where lay people decide the dispute. Lawyers are not permitted to appear and the matter is resolved based on broad principles of fairness and justice rather than according to ordinary legal principles.
• The District Court can hear claims that do not exceed $350,000 in value or that it is permitted to hear by statute. The District Court hears appeals from several smaller, specialist jurisdictions and the Disputes Tribunal. The District Court has a limited jurisdiction in Admiralty – ship arrests cannot be commenced in the District Court.
• The High Court is New Zealand’s court of original jurisdiction. It can hear any civil claim – although in practice only those claims exceeding the District Court’s jurisdiction are filed there. It is also the court of first instance for all judicial review claims, has full jurisdiction in Admiralty and hears appeals from the District Court.
• The Court of Appeal hears appeals from the High Court (and some other specialist jurisdictions).
• The Supreme Court is New Zealand’s final appellate court. It hears appeals from the Court of Appeal. Until 2003, New Zealand’s final court of appeal was the Judicial Committee of the Privy Council in London. If the appeal relates to a decision given before 31 December 2003, the Privy Council remains the final appellate court, although the prospects of it hearing any more appeals from New Zealand appears slim.

New Zealand also has many specialist tribunals, including the Family Court (properly a division of the District Court), Employment Court, Environment Court, and Māori Land Court.

New Zealand court processes closely resemble those of England and Australia. Pre-trial discovery is limited to document discovery (which proceeds on similar concepts of relevance to England) and interrogatories answered on affidavit. There is no process of deposing witnesses in civil trials in New Zealand. With a small number of exceptions, civil cases are determined by a judge sitting alone and not with a jury.

Since the 1990s, the New Zealand courts have, to various 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. The case management systems ensure that cases receive regular judicial attention and are dealt with in an expeditious manner. On average, cases in the High Court are finally disposed of within two to three years of proceedings being initiated.

Successful litigants are usually entitled to a contribution towards their legal costs. The amount awarded is a matter of judicial discretion. Generally speaking, an award of costs will cover approximately 25%—50% of the actual legal costs incurred by the successful litigant. This has tended to remain the case despite a change in the Court rules which provided a new approach to costs awards, aiming to lift recover to 60% but based however, not on actual costs, but on a notional reasonable cost as assessed by the Court.

Settlement

The New Zealand courts generally encourage litigants to settle their disputes without going to trial. Indeed, it is one of the focal points of the case management system and judges (in the District Court and High Courts) can conduct judicial settlement conferences. That focus reflects a strong culture (almost 60 per cent of general proceedings settle at the parties’ initiative) and infrastructure for alternative dispute resolution in New Zealand.

Like most countries, New Zealand has enacted legislation that is based on the Model Law on International Commercial Arbitration: the Arbitration Act 1996. The Act also gives effect to various international protocols and conventions. It allows parties to resolve their disputes by arbitration without the interference of the Courts except in circumstances of failure of due process, fraud or where urgent relief is sought.  

New Zealand is also a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Arbitral awards from other state parties are recognised and enforceable in New Zealand.

• Personal Injury Liability: Accident Compensation
• Exemplary or Punitive Damages
• Consumer Protection Legislation
• Contract Reform Legislation
• Bill of Rights Act
• Court and Arbitral Processes

Other guides

Taking Evidence in New Zealand for use in Overseas Proceedings

Litigation funding in New Zealand

Ship Arrests in New Zealand - A practical guide to ship arrests in New Zealand

Enforcing Foreign judgments in New Zealand - A guide through the three different methods of enforcing a foreign judgment in New Zealand

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