New Zealand: The importance of complying with court orders

Last Updated: 22 March 2017
Article by Shane Campbell

Introduction and summary

When a court makes an order, the party or parties against whom those orders are made may well query what will happen if they do not comply with those orders. The recent decision of Palmer J in Zhang v King David Investments Ltd (in Liq) [2016] NZHC 3018 provides an example of the adverse consequences which can occur.

Ms Hsiang-Fen Ying was fined $10,000 as a result of "blatant contravention" of court orders (at [2]). Palmer J held that Ms Ying came close to being imprisoned, but in the end the fine was sufficient in the prevailing circumstances. If the payment of $10,000 was not made within 10 working days, his Honour noted she would be imprisoned for 20 days, or until payment was made, whichever comes first.

The decision also addressed the issue of setting aside orders obtained by consent. However, as that is not the focus of this brief article, it will not be discussed further.


Ms Ying and her husband, Mr Jinyue Young are from Taiwan. Ms Ying was the sole director and shareholder of King David Investments Limited (King David). In March and April 2013, King David agreed to sell certain property to Ms Zie Zhang. The purchase price was $399,000 and Ms Zhang paid a deposit of $30,000.

Settlement did not occur and ultimately Ms Zhang lodged a caveat over the property and filed proceedings seeking specific performance of the contract and damages. On the morning of the second day of the trial, the parties agreed to settle and signed a settlement agreement recording as follows:

  1. King David would specifically perform the sale and purchase agreement by transferring the property by 13 September 2016;
  2. King David would pay $220,000 to Ms Zhang by way of a set off from the sale price on settlement; and
  3. the proceedings against Mr Young would be discontinued and the costs would lie where they fell.

By a Minute of the same day, Duffy J made consent orders giving effect to the agreement. By the terms of the Minute, leave was reserved to the parties to come back to the court for any further matter in relation to the proceeding, should the need to do so arise.

In the days after the consent orders were made, Ms Ying and Mr Young made several attempts to withdraw their consent to the agreement. For various reasons, the application to set aside the consent orders failed.

On 26 July 2016, King David applied for Ms Zhang's caveat over its property to lapse. Ms Zhang took no steps to defend that application so the caveat lapsed. This was apparently on the basis that Ms Ying (the director) considered that because Ms Zhang had taken no steps to defend the proceeding, she no longer wished the sale of the property to proceed. Inconsistently with this belief, on 29 July 2016 Mr Young sought to appeal the consent orders to the Court of Appeal. The application was declined on the grounds of jurisdiction on 7 September 2016.

The caveat Ms Zhang had lodged over the property lapsed on the application of King House. On 30 August 2016, Ms Ying agreed to sell the property to a third party, Topcut Property Limited (Topcut) for $655,000. That sale settled on 12 September 2016. Before settlement, on 6 September 2016, Ms Zhang's lawyer emailed Ms Ying noting that settlement should proceed in accordance with the consent orders (i.e. that the property should be transferred to Ms Zhang). The lawyer stated that a failure to comply would elicit an application to hold Ms Ying in contempt of court.

On 21 September 2016, Ms Zhang applied to the High Court on a 'without notice' basis for orders arresting and imprisoning Ms Ying and Mr Young for contempt of court until they disgorge the proceeds of the sale of the property, and a freezing order over another property owned by the Ying and Young Trust. The application was directed to be served on Ms Ying and Mr Young, but still they did not appear on the day of the hearing. Instead, on the same day Ms Ying applied to put King David into liquidation. Palmer J found that the purpose of the liquidation was to avoid the consequences of the consent orders.

On 27 September 2016, Woodhouse J set the matter down for hearing and made various ancillary orders. This included an interim freezing order over one property owned by the Ying and Young Trust (i.e. a trust for the benefit of Ms Ying and Mr Young) and an order freezing the bank account of King David.

The decision on contempt

The law of contempt

Palmer J embarked on the analysis of the law of civil contempt by stating the following (at [39]):

The rule of law in New Zealand involved honouring court orders in order to uphold and protect the administration of justice, not just to required compliance with an instrument of state coercion. The law of contempt supports that wider purpose. ...

His Honour then stated that the law of civil contempt is accurately summarised in a 2014 issues paper of the New Zealand Law Commission, Contempt in Modern New Zealand (Law Commission Contempt in Modern New Zealand (NZLC IP36, 2014) at [7.18]–[7.32]). The position was summarised as follows (citations omitted):

  1. for civil contempt, several elements must be proved beyond reasonable doubt:
    1. the terms of the order were clear and unambiguous, were binding on the defendant and the defendant had knowledge, or proper notice, of the terms of the order;
    2. the defendant has acted in breach of the terms of the order; and
    3. the defendant's conduct was deliberate in the sense that he or she deliberately or wilfully acted in a manner that breached the order.
  2. it is not open to a defendant in a contempt proceeding to challenge the validity of the order said to have been breached;
  3. the imposition of sanctions is within the discretion of the court, considering the extent of the contempt, the motive with which the defendant was acting and the degree of prejudice suffered by the innocent party. The following considerations are relevant:
    1. a penalty should not be imposed where there has been deliberate defiance of a court order;
    2. sequestration temporarily places property of the contemnor in the hands of the sequestrators until the contempt is purged;
    3. accidental or unintentional disobedience of the court would be unlikely to justify sequestration or imprisonment;
    4. a degree of fault or misconduct would be required to justify sequestration or imprisonment;
    5. the power to imprison, for a maximum of three months, should be exercised with great care, and only as a last resort;
    6. an injunction may be granted instead of committal to prison or sequestration;
    7. fines are also an available penalty, taking into account the seriousness of the contempt and the damage done to the public interest; and
    8. costs may be payable by the defendant if found guilty of contempt which may include indemnity costs.
    9. Holding Ms Ying in contempt

      As noted above, Palmer J held that Ms Ying was in contempt of court. The reasons for doing so can be summarised as follows:

      1. The terms of the consent orders were clear, unambiguous and binding on Ms Ying.
      2. Ms Ying clearly knew of the orders as she tried to challenge them.
      3. Ms Ying acted in defiance of the court orders by selling the property to a third party and not transferring the property to Ms Zhang. This action was deliberate.

      Palmer J then made orders in order to vindicate the rights of Ms Zhang. This included payment of the value she should have received by the terms of the settlement and the order for transfer of the property. Interest was ordered on this sum, and Ms Ying was ordered to pay Ms Zhang's indemnity costs.

      His Honour then made the order fining Ms Zhang $10,000 for contempt, followed by the threat of imprisonment if the fine was not paid.


      This decision highlights the importance of parties complying with court orders once they have been made. From this point a party only has limited options if they do not wish to abide by an order of the court. If you do not wish to comply with court orders, it is recommended you seek legal advice.

      The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Shane Campbell
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions