Businesses 'using gangs to collect debt'

Businesses are employing gangs to collect debts rather than go through a costly court process, a parliamentary committee was told today.

New Zealand Law Society president Chris Darlow told the regulations review committee, which is hearing a complaint against increases to High and District Court fees, that it would put justice out of the reach of ordinary people.

Increases in 2001 had already had a detrimental effect, Mr Darlow said.

"I know of small businesses who have simply bypassed the legal process when it comes to collecting debts," he said.

"I will go so far as to say that I know certain businesses who go and employ gangs to collect debts. It's as simple as that."

Mr Darlow, appearing with constitutional lawyer Sir Geoffrey Palmer and Bar Society president Robert Dobson, said he was from a small Auckland law firm which had mostly "mums and dads" as clients.

The fee increases, such as an increase from $65 to $1100 for filing a counter-claim in the High Court, would prove a big disincentive to clients of his firm.

Courts would not allow a High Court judge to walk into the courtroom in a trial which would last just five days without the claimant paying $13,000 up front, or $4500 in the District Court, Mr Darlow said.

"It's all very well to say that the registrar has a discretion to waive the fee but waivers are not available in practice to people who, say, own or have a reasonable equity in their own home."

Lawyers were often blamed for charging high fees but often "carry" clients on a delayed payment or reduced fee basis.

"Of course, higher fees don't worry the wealthy to who they appear to be targeted, nor do they worry the very poor on legal aid, but they are having a big impact on the large numbers in the middle," Mr Darlow said.

"And we must not make the mistake of thinking that people go to court voluntarily. I have yet to see a willing litigant."

Courts Minister Rick Barker said when announcing the fee increases that they were designed to address variances, and to strike a public/private good balance.

Today Sir Geoffrey tabled a letter from Chief Justice Dame Sian Elias, written last year, in which she questions whether a percentage cost recovery approach is appropriate in the court system.

Court users were unlikely to shoulder an unfair burden if the aim was to recover a proportion of the actual costs, Dame Sian said.

"The real beneficiaries in society of the cost of providing courts are those who do not have to use them, because settlement of their disputes takes place against the potential for access, and those who are able to order their lives lawfully because of the legal precedent generated through the courts," she said.

- NZPA