What Evidence Do You Need Before Starting A Commercial Claim?

Summary

• In New Zealand commercial disputes, courts decide cases based on what can be proved rather than what parties believe happened; before filing a claim, businesses should gather all versions of the contract and related correspondence, document the breach with contemporaneous evidence, and quantify their loss with supporting financial records.
• Electronic evidence – including emails, text messages, and accounting records – must be preserved as soon as a dispute becomes apparent, as it can be lost or overwritten quickly; staff should be instructed not to delete relevant communications and key records should be copied and stored securely.
• New Zealand law requires claimants to take reasonable steps to mitigate their loss after a breach; failure to do so may result in reduced damages, so businesses should keep records of all steps taken to limit the impact of the other party’s conduct.
• This article is a plain-English guide to gathering and preserving evidence for commercial disputes for New Zealand businesses, prepared by LegalVision, a commercial law firm.
• LegalVision specialises in advising clients on commercial litigation and dispute resolution.

Tips for Businesses

Gather all contract versions, variations, and related correspondence before assessing your claim. Document the breach with contemporaneous evidence such as photographs, complaints, and correspondence where the other party acknowledged the issue. Preserve electronic evidence immediately – do not wait for proceedings to commence. Keep records of all steps taken to mitigate your loss, as courts will scrutinise whether you acted reasonably after the breach occurred.

Before you pursue a commercial dispute, assess the strength of your evidence. Courts do not decide cases based on what you believe happened. They decide cases based on what you can prove. In New Zealand, parties usually resolve commercial disputes through the District Court or High Court. The Evidence Act 2006 governs the applicable evidence rules. New Zealand courts expect parties to prepare properly. You should support your claim with documents, a clear calculation of loss and compliance with any dispute resolution requirements. This article explains what evidence you need to gather before starting a commercial claim and how to preserve it effectively.

Commercial Disputes 

Commercial disputes arise in many forms, including but not limited to: 

• unpaid invoices
• breached contracts
• misrepresentation
• negligence

Type of Evidence to Gather Before Starting Your Claim

Start With the Contract

The contract itself forms the foundation of most commercial claims. This may sound obvious. However, businesses often discover their agreement was not properly documented. They may also find the written terms do not reflect what the parties agreed in practice.

Gather every version of the contract. This includes the final signed version, relevant drafts, schedules and annexures. If the parties varied the agreement over time, gather evidence of those variations. Emails confirming new payment terms can be as important as the original contract. A signed amendment can also be critical.

If the contract was partly oral, keep written records of the discussions. Meeting notes and follow-up emails can help show what the parties agreed.

Pay close attention to any notice requirements or dispute resolution clauses. If you ignore the required process, you may undermine your claim. You may also expose your business to a costs order.

Document the Breach

Once you establish what the parties agreed, you need evidence of the other party’s breach or conduct. The evidence you need will depend on the type of dispute.

In a debt recovery matter, gather invoices and proof of goods or services delivered. You should also keep records showing the unpaid amounts. Bank statements or accounts receivable records can support this.

In a dispute about defective work or non-performance, keep evidence of complaints raised at the time. This may include photographs, inspection reports, expert assessments or relevant correspondence. Correspondence where the other party acknowledged the issue can also help.

If you allege misrepresentation, you must show what the other party said or represented. You must also show that you relied on it and suffered loss as a result. Marketing materials, pre-contractual correspondence and records of conversations can all be relevant.

Quantify Your Loss

A court can only award losses you can prove. Vague claims about damage will not succeed. You must show your loss clearly. You should support it with financial records, invoices, valuations or expert evidence where appropriate.

If you claim lost profits, you will need financial statements and forecasts. You will also need evidence linking the breach to the loss. If you paid others to fix the problem, keep all receipts and invoices.

Mitigation also matters. New Zealand law requires claimants to take reasonable steps to reduce their loss. If you fail to do this, the court may reduce your damages. Keep records showing how you limited the impact of the breach.

Preserve Electronic Evidence

Electronic evidence plays a key role in many commercial disputes. This can include emails, text messages and accounting software records. It can also include messages from internal communication platforms. This evidence may be deleted, overwritten or lost if you do not preserve it quickly.

As soon as a dispute becomes clear, tell relevant staff not to delete related communications. You should also copy key records and store them securely. If the dispute involves a former employee or departing business partner, act quickly. This can help preserve access to shared systems and accounts.

Understand the Rules of Evidence

Once proceedings begin, the Evidence Act 2006 will apply to your evidence. This means the court may not admit everything you have gathered. For example, hearsay evidence is generally inadmissible unless a recognised exception applies.

If you rely on expert evidence, that evidence must meet specific requirements. These include requirements about the expert’s qualifications and the basis for their opinion.

Key Takeaways

When assessing whether you are ready to bring a claim, keep the following points in mind:

• the contract is your starting point. Gather all versions, variations and related correspondence before assessing your position;
• you must quantify your loss. Identify and document each head of loss with supporting financial records;
• mitigation is key. Keep records of the steps you took to reduce your loss after the breach occurred;
• preserve electronic evidence as soon as possible; and
• a well-evidenced claim is more likely to succeed at trial. It may also help you reach a favourable settlement earlier.

LegalVision provides ongoing legal support for all businesses through our fixed-fee legal membership. Our experienced disputes lawyers help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. 

Frequently Asked Questions

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.