What to do when they won't pay up REDUCE YOUR RISK OF LOSING MONEY by taking some of these steps below first. BY GILLIAN SPRY - NORRIS WARD MCKINNON

You hire a caterer to provide a dinner meal for a conference you are hosting. You pay the sum of $10,000 to them in advance. On the day of the conference they don’t arrive. How do you recover the money paid? This article gives you a brief outline of what you should do to reduce your risk and what options you have for getting your money.

Reducing Your Risk
Don’t rely on an oral agreement. Have a written contract in place, preferably drafted by professionals and not just written by you at home. Many disputes involve oral agreements or home made contracts which do not protect you. A well drafted written contract, which sets out each person’s responsibilities, will often ensure that, if disputes do arise, they are easier to resolve. Also find out as much as you can about the person or company you are dealing with. Are they reliable and trustworthy?

Get Advice
When things do go wrong get advice from your lawyer. Don’t do and say things to the debtor which you may regret later. The first step in recovering debt is usually for your lawyer to send a letter setting out your demand and giving an opportunity for the person to pay. You may have to negotiate to some extent, as with the cost of legal proceedings a well worked out settlement can be cost effective.

Proceedings
Even with a written contract and opportunities to pay and settle, you may still have to go to court. The first step is to obtain Judgment against the person or company, through Summary Judgment or ordinary court proceedings.

Summary Judgment Proceedings
If the debt is over $25,000 and less then $250,000 you can file Summary Judgment Proceedings. This proceeding is used where you believe the debtor has no defence. Affidavit evidence is filed at the beginning so that the judge can decide the matter on the spot if no reasonable defence is received.

Ordinary Court Proceedings
Where you believe the debtor may argue against paying the debt, or the amount owed is less than $25,000 or more than $250,000, ordinary court proceedings are used. This is a longer process and evidence is not filed at the beginning.

Bankruptcy
Once you have obtained Judgment against an individual, and they are still not paying, you can bankrupt them. The Official Assignee then controls their assets and will pay you if there is available money.

Liquidation
If it is a company that you have obtained Judgment against, they are still not paying and you have reasonable grounds for believing they are insolvent, then you may apply for the company to be liquidated. The company assets will be used to repay you.

Other Options
Once you have Judgment there are a number of ways to actually get your money. These are:
Distress Warrant. A bailiff will seize the debtor’s money, goods, chattels or securities to sell for you to get your money.
Garnishee order. If another person owes money to the debtor, you can apply to have that person pay you instead.
Charging order. This is a “freeze order”, preventing selling or disposal of the debtors land or assets until you have been paid.
Examination and Attachment order. This applies to an individual debtor only. The debtor must appear in Court and give evidence about their financial means. An attachment order can be put on the debtor’s income and amounts will be deducted from the income and paid to you.

Gillian Spry works for Norris Ward McKinnon which is one of New Zealand’s largest regional law firms based in Hamilton. She specialises in commercial corporate, business, and commercial litigation, plus employment, property and family. Contact Gillian Spry on (07) 834 6000 or email GSpry@nwm.co.nz