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Partnership Law Act 2019

Relationship of partners to third persons and to each other - Relationship of partners to one another

42: Court may charge partner’s interest for their separate judgment debt

You could also call this:

"Court can use a partner's business money to pay their personal debt"

If someone owes money to another person and doesn't pay it back, the court can help. This is what happens when one partner in a business partnership owes money:

The High Court can do a few things to help the person who is owed money. They can order that the partner's share of the business be used to pay the debt. This means the money the partner would normally get from the business can be used to pay what they owe.

The court can also choose someone to collect the money that the partner would usually get from the business. This person can take the partner's share of the profits and any other money the partner would normally receive.

The court can also give other instructions to make sure the debt gets paid. They can do this when they first make the order or later on if needed.

The District Court can do the same things as the High Court in these situations. This can happen if the person owed money has a judgement from the District Court saying they should be paid.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206042.

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Business > Industry rulesCrime and justice > Courts and legal help
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Part 3Relationship of partners to third persons and to each other
Relationship of partners to one another

42Court may charge partner’s interest for their separate judgment debt

  1. The High Court may,—

  2. on the application of a judgment creditor of a partner (A), make an order charging A’s interest in the partnership property and profits with payment of the amount of the judgment debt and interest on that debt; and
    1. appoint a receiver of—
      1. A’s share of the partnership profits (whether already declared or accruing); and
        1. any other money that would otherwise be payable to A in respect of the partnership; and
        2. direct all accounts and inquiries, and give all other orders and directions,—
          1. that might have been directed or given if A had given the charge in favour of the judgment creditor; or
            1. that the circumstances of the case require.

            2. The High Court may act under subsection (1)(b) or (c)—

            3. when making an order under subsection (1)(a); or
              1. by making a subsequent order or direction.

                1. The District Court may make any order, or give any directions, that may be made or given by the High Court under this section if—

                2. a judgment creditor has obtained in, or removed into, the District Court a judgment, order, or decree for the payment of a sum of money; and
                  1. the judgment creditor applies for an order or a direction under this section.

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