Private International Law (litigating in the trans-Tasman context and beyond) [1 ed.]

Citation preview

NZLS CLE Ltd CONTINUING LEGAL EDUCATION NEW ZEALAND LAW SOCIETY N ZLS EST 1869

I I

--

-

-

-

,

' I,

'

I

..

.. "Cl ~

ID -· < .. Ill

....

111111

.. .... :I

' :I -4 .. 111 ID

3 ;

Ill .. :I

0

n

::i

..

O Ill :I -

,-

ID Ill

!~ Ill' :I -

C.:

.,.ca· ID 111

'< .. 0 -·

;.~ :I

> C: Cl C:

(II

-4

. N

0

PRESE NTE R S

David Goddard QC Prof Campbell McLachlan QC

www. lawyersed ucation .co. nz

NZLS CLE Ltd CONTINUING LEGAL EDUCATION NEW ZEALAND LAW SOCIETY

SEMINAR

Private International Law - litigating in the trans-Tasman context and beyond David Goddard QC and Prof Campbell McLachlan QC Correction Page 46: please note numbering for s 24(2) has been corrected from: (2) .. . (i), (ii) ... to that below

(2) In detem1ining whether an Australian court is the more appropriate court to detennine the matters in issue between the parties to the proceeding, the New Zealand court must not take into account the fact that the proceeding was commenced in New Zealand, but must take into account the following matters: (a) the places of residence of the parties or, ifa party is 1101 an individual, its principal place of business: (b) the places of residence of the witnesses likely lo be called in the proceeding: (c) the place where the subject mailer of the proceeding is situated: (d) any agreement between the parties about the court or place in which those mailers should be determined or the proceeding should be inslituled (other than an exclusive choice of court agreement lo which section 25( I) applies): (e) the law that it would be most appropriate lo apply in the proceeding: (f) whether a related or similar proceeding has been commenced against the defendant or another person in a court in Australia: (g) the financial circumstances of the parties, so far as the New Zealand court is aware of them: (h) any other mailers that the New Zealand court considers relevant.

•

PRESENTERS David Goddard QC, Wellington David has a wide ranging commercial litigation and law reform practice in New Zealand and overseas. He has practised as a barrister since 1999, and was appointed Queens Counsel in May 2003. Before David went to the bar he was a partner at Chapman Tripp from 1991 to 1998. From 2001 to 2003 David held a part-time appointment as a Special Counsel - International with the New Zealand Ministry of Economic Development, advising on cross-border legal coordination. David has represented New Zealand in bilateral and multilateral negotiations on a wide range of cross-border issues. He was a member of the Trans-Tasman Working Group that developed the new trans-Tasman service of proceedings and enforcement of judgments regime that is provided for in the Trans-Tasman Proceedings Act 2010. David publishes and speaks extensively in his specialist areas. He is the author of the "Conflict of Laws: Jurisdiction and Foreign Judgments" title of the Laws of New Zealand. David has presented NZLS seminars on company and commercial law, the law of obligations, and drafting better court documents. He presented the original 1991 seminar Conflicts of Law and (with Helen McQueen) the 2001 seminar Private International Law in New Zealand.

Prof Campbell Mclachlan QC, Wellington Campbell (LL B (Hons) (Well), Ph D (Land), Dip (c l) (Hag Acad Int'! Law)) is Professor of Law at Victoria University of Wellington, teaching public and private international law and international arbitration, and Barrister (NZ, call 1984, Queen's Counsel 2007), with chambers in New Zealand (Bankside Chambers, Auckland), Singapore (Maxwell Chambers) and London (Essex Court Chambers). He advises and appears in the New Zealand courts in particular on international law issues. He is one of the Specialist Editors of Dicey, Morris & Collins on the Conflict of Laws (14 th edn 2006; 15 th edn forthcoming 2013). His book (with Matthew Weiniger and Laurence Shore) International Investment Arbitration: Substantive Principles (OUP, 2007) was the first modern treatise on investment treaty law as applied by arbitral tribunals, and won the J F Northey Book Prize in 2008. His lectures at The Hague Academy of International Law, on Lis Pendens in International Litigation, which deal with international conflicts of jurisdiction, were published in 2009. A New Zealander, Campbell spent 15 years practising in the field of international litigation in London as a partner in the firm of Herbert Smith. He took up his present position in New Zealand in 2003. Campbell is a member of the ICSID Panel of Arbitrators and has been appointed as president or member of a number of arbitral tribunals. Campbell chaired the Cross-border Issues Sub-Committee of the High Court Rules Revision Committee, preparing the revised rules on jurisdiction that are now found in the High Court Rules 2009. The statements and conclusions contained in this booklet are those of the author(s) only and not those of the New Zealand Law Society. This booklet has been prepared for the purpose of a Continuing Legal Education course. It is not intended to be a comprehensive statement of the law or practice, and should not be relied upon as such. If advice on the law is required, it should be sought on aformal, professional basis.

CONTENTS INTRODUCTION .............................................................................................................................. 1

I. 1.1

WHAT IS "PR.JV ATE INTERNATIONAL LAW"? ................................... .... .. .... .......... .... .......... .... .. .......... . 1

1.2 1.3 1.4

THE SOURCES OF NEW ZEALAND PR.JV ATE INT ERNATIONAL LAW .. ........ ..... ......... .. ...................... ..... 3 THE TTPA -AN OVERVIEW ........................................................... ...... ...... .... .. ... .. ...................... ...... 4 THE SCOPE OF THIS BOOKLET ......................................................... ................................................... 6

2.

WHY BOTHER WITH PRIVATE INTERNATIONAL LAW? .................................................... 9

3.

HOW COURTS DEAL WITH FOREIGN LAW .......................................................................... 11 WHY DO NEW ZEALAND COURTS REFER TO FOREIGN LA w? ............................................................ 11

3.1 3.2 3.3 3.4

4.

THE ASCERTAINMENT OF FOREIGN LAW .......................................................................................... 11 SECTION

144 OF THE EVIDENCE ACT 2006 ................................................. ..................... ................ 12

ADMISSIBILITY OF AUSTRALIAN PUBLIC DOCUMENTS ................................................................... . 14

JURISDICTION AND FORUM CONVENIENS - WHICH COURT WILL A DISPUTE BE HEARD IN? ....................................................................................................................................... 15 4.1 4.2

THE NATURE OF THE ISSU ES ..... ..... ................... ............................................................................... 15 ACTING FOR A PLAINTIFF WHO WISHES TO SUE A DEFENDANT NOT RESIDENT IN NEW ZEALAND .... 16

(a) (b) (c) (d) (e)

(I) (g) (h) (i)

0)

Service in New Zealand ....... ..................... ..... .... .. ....... .. ............ .............. ......................... .. ... ... . 16 Service under an agreement .......................... ......... ... .. ........... .. ... ... ...................... ... .. ... .... ..... ... 17 Service on an attorney or agent .. ... .. .... ..... .. ... ...... .................... ... ...... ...... .. ... .. .. ......................... 18 Service in Australia under the TTPA ... .... .................. ................ .... .............. .. ........................... 19 Personal service out of the jurisdiction (non-TTPA claims) ............ ..... ....... .. ........................... 20 Service out of the jurisdiction without leave - High Court Rule 6.27....................................... 20 Service out of the jurisdiction with leave - High Court Rule 6.28 .................... .... ................... . 23 Substituted service ............................... .. .. ... ..... ... ...... .. .... .. .. ... ... ............................................ .... 26 Notice ofproceeding for service under High Court Rules 6.27 or 6.28 .... ..... .... ...... ................ 27 Serving the documents .. .. ..... ...... .. ................. ..................................... ........ ....... ... .................... . 28 The defendant's response .. .......... ... ... ..... ... ..... ............ ............... ...................... ....................... ... 29 Entry ofjudgment by default ... ...... ...................... .... ................................. .. ..................... ..... ..... 29 Summary judgment applications ....... ........... .......... .. ... .... ... ... ......... ........ .... .... ..... ... .. ................. 31 Disputes Tribunal proceedings .. .... ..... .............................................................. ................ .... ... . 32 Persons who cannot be sued in New Zealand....... ................................................... .... .... ......... 33 The importance of thinking about enforcement against foreign defendants .... .............. .. .... ..... 35

(k) (1) (m) (n) (o) (p) 4.3. ACTING FOR A FOREJGN

DEFENDANT UPON WHOM NEW ZEALAND PROCEEDINGS HA VE BEEN SERVED

OUTSIDE NEW ZEALAND ........................................................ ........................... ... ........................... 36

Cover and text stocks used in this publication are from Forestry Stewardship Counc~l certifie~ mills manufactured under the environmentally responsible paper manufactured envuonmenta ' management system ISO 14001 , using pulp from well managed forests and other controlled sources.

(a) Option one - do nothing ..... ....... ... ........................... ................................................... ... ....... .... 36 (b) Option two - object to New Zealand jurisdiction .... ... ................... ............ .......... ..... .. ... .... ... .... 38 (c) Option three - apply for a stay on the grounds offorum non conveniens ...... ... ... ... .. ... ..... .... ... 43 (d) Option four - defend the action in the normal way ........... ................... ... ..... .... ........................ 44 Burden ofproof ....... ............................... ........ ...... .. ........... ................................ ... .... ......... ................. 44 4.4 ACTING FOR A DEFENDANT VALLDLY SERVED IN NEW ZEALAND .......................... .......................... 45 4.5 ACTING FOR A DEFENDANT SERVED IN AUSTRALIA UNDER THE TTPA .......................................... .46 4.6 FACTORS RELEVANT TO WHETHER NEW ZEALAND IS THE APPROPRIATE FORUM ............................ 48 4.7 FORUM CLAUSES ..... ............ ...... ............ ... .................. ....................... .......... ... ... ..... ..... ...... ..... ......... 51 (a) Submission to New Zealand jurisdiction .............................................. .. .... ...... ...... .. .... ............. 5 l (b) Submission to a foreign jurisdiction .. ................................ ........... .......................... .. ............... . 52 (c) Clauses relating to forum conveniens .................... ................................ ......................... ..... ..... 53 4.8 ACTING FOR A NEW ZEALAND DEFENDANT UPON WHOM PROCEEDINGS IN A FOREIGN COURT HAVE BEEN SERVED ........ .............. ............................... ............................... .............................................. 53 (a) Obtaining advice inforeignjurisdiction ... .. ....................... .. ................... .... .... ..... ............... ...... 53 (b) Injunctions to restrain foreign legal proceedings ................... ...................... .. .. ..... ...... ............. 54

5.

ENFORCEMENT OF FOREIGN JUDGMENTS ......................................................................... 57 5.1 5.2

THE EFFECT OF FOREIGN JUDGMENTS IN NEW ZEALAND ................................................................. 57 ENFORCEMENT OF FOREJGN JUDGMENTS AT COMMON LAW ............... ... .. ...... .. .. .... .. ...... .. ................ 58

(a) (b) (c) (d) (e) (f) (g) (h) (i}

0) (k) (l) (m) (n) 5.3

Which foreign judgments are enforceable at common law in New Zealand? .... ....................... 58 Jurisdiction ofa foreign court .. ...... .... ........... ...... ..................... ...... ............ ............. ................. 58 Judgment for a debt, or definite sum of money ......... ....... ........ .............. .. ............ ....... .. ..... ....... 59 Judgment not in respect of taxes, fines or penalty ................................................. ................... 60 Judgment must be final and conclusive ....... .. ... ................... .. ............................................. ... .... 61 Conclusiveness offoreign judgment in New Zealand .......... ........ .. ......... ............ ............ ... ....... 61 First defence: judgment obtained by fraud .. ... ................. .. .......... ........ ........................ ... ........ .. 6 l Second defence: enforcement contrary to public policy .. ...................................... .............. ... .. 64 Third defence: breach of natural justice .................. .. ...... .......................... ...... ......... ...... .......... 65 Recognition offoreign judgments .... ..... .... ....... ........... .... ................. .. ........ .. ............................. 66 Cause ofaction does not merge in foreign judgment ... ... ..... ............ ..... ..................... ............ ... 67 Procedure for enforcement ........ ................ ......................... .. ..... ... ..... ......... ......................... .... . 67 Limitation period for action on a foreign judgment .... ............... .......... .. ................................... 68 Judgment in foreign currency ................ ............................ .. ...... .. ...... .. ...... ..... .................. .. ...... 69

(c) (d) (e) (f) (g) (h) 8.3

(a) (b) (c) (d) (e) (f) (g) 5.4

The legislation .......... ........ .... .... ............ ... .... ........ ........................... ........ ............................ .... ...69 Which judgments can be registered under Part I of the 1934 Act? .. ......................................... 70 Part IA - Orders ofFederal Court ofAustralia under Trade Practices Act J974 (Cth) .......... 73 Applications for registration ............... .. ........... ..................... ..... ..... ... ................................ ... .... 74 Effect of registration ..... .. ........................... ................ ............... .... ........ ......... .......................... . 76 Applications to set registration aside ....... .... ............ ... ........ ....... ... ........ .. ................... ............ ... 77 Recognition a/judgments under the 1934 Act ........ ... .................. ......... ..... ..... ........... ............... 84

8.4

8.5

8.6

CONTRACT .................................................................................................................................... 131 THE PROPER LAW OF A CONTRACT .............. ............................ ...................................................... 131

(a) (b)

6.

(a) (b) (c) (d) (e) (f) (g) (h) (i)

INDIRECT ENFORCEMENT OF FOREIGN JUDGMENTS ..... .................................................................... 90

INTERIM RELIEF ........................................................................................................................... 91 6.1

INTRODUCTION ......................... ..... ......................................................................... ...... ... ............... 91

6.2

INTERJM RELIEF IN RESPECT OF ASSETS OUTSIDE NEW ZEALAND .. .................................................. 92

(a) (b) 6.3

Grounds .................. ........ .... ....................................... .. .. ..... .. .................................... ............ .. .. 92 Territorial effect.... ... ........... .... ... .... ............................. ............... ................................. .. ............ 93 lNTERJM RELIEF AGAINST PERSONS NOT RESIDENT IN NEW ZEALAND ............................................. 94

0)

6.4 INTERJM RELIEF fN SUPPORT OF FOREIGN SUBSTANTIVE PROCEEDINGS .............................................. 96

(a) (b) (c) (d) 6.5

7.

Interim reliefgenerally in support offoreign proceedings ..... ............................. .. ............. ...... 96 Interim relief in support of Trans-Tasman proceedings ...... .......... ....... ................. ................... 97 Freezing orders in support offoreign proceedings ...... ...... ........... ......... ................. ... ...... ...... ... 97 Real connecting link...... ... ........ .. .... .......... ............ ... ........ ............... .... ....... ......... ........... .. .. ..... .. . 98

(k)

Ancillary relief against a prospective judgment debtor ........ ... .............. ........... ..................... ... 99 The position of third parties ............... ... ................................. ............ ...... .......... .......... .... ......... 99 Limiting the use that may be made of information that is disclosed ......... ............ .. ............. ... 101 Disclosure orders where defendant may face criminal charges .. ............... .. .......... ............... . 10 l

10.

0BTAINfNG EVIDENCE FROM OUTSIDE NEW ZEALAND FOR A NEW ZEALAND PROCEEDfNG .......... 103

(a) (b) (c) (d) 7.2

0BTAJNING EVIDENCE WITHIN NEW ZEALAND, FOR AN OVERSEAS PROCEEDING ....... ................... 114

(a) (b) (c) 8.

Willing witnesses ........ ... ........ ... ....................... ............ ................... .... .. ......... ........... .. .... ......... 104 Unwilling witnesses ........................... ... ......... .... ...... .... .......................... ....... .. ..... .. .... .. ........... 109 "Trans-Tasman" arrangements ........................ .............. ..... ........ ................................... ...... .. 109 Provision of discovery from overseas persons, for New Zealand proceedings ... ....... ..... ........ 112

VIENNA CONVENTION ON A UNIFORM LAW FOR THE SALE OF GOODS ......................................... 139

9.4

CONTRACTS MADE ONLINE ........................................................................................................... 141

The importance of choice of law clauses ......... ... .... ......... .... ................................................... 142 Limits on the effect of choice of law clauses .... .... ........ ....... .................................................... 142

TORTS ............................................................................................................................................. 143 10.l

ACTS AND OMISSIONS OUTSIDE NEW ZEALAND ............................................................................ 143

10.2 DOES NEW ZEALAND LAW ALWAYS APPLY IN RELATION TO ACTS DONE IN NEW ZEALAND? ....... 145 10.3 WHERE IS A TORT COMM ITTED? .................................................................................................... 146

OBTAINING EVIDENCE IN CROSS-BORDER LITIGATION .............................................. 103 7.1

Capacity to contract ................................ ..... ........ ........ ... ........................ .... ........ ..... .......... .... 134 Formation ofa contract ............................. ... ...... ... ...... .. .... ..................................................... 135 Formal validity .............. .... .... ................... ...... ......... ....... ........ ...... ...... ... .. ...... .. ... ........ .... .. ...... 136 Essential validity ................. .. .... .... ................... ............................ ......... ... ... ... .. ..... ... ... .. .......... 136 Who can rely on a contract? .................. ............................................. .. .... ... .. .. .. ... .................. 136 interpretation of the contract ..... ...... ....................... .................. .......... .... .. ........ .. .................... 136 Obligations under a contract, and their performance .. ... ....................................................... 137 Discharge of contracts ........................... .. .. ... ..... ... ..... ... .... ..... .. ..... ........................................ .. 137 Jllegality ........ ......................... ...... ........ ............ ................................... .. ...... .. .......................... 137 Breach of contract ............... .............. ................ ................................. ...... ...... ....... ................. 138 Moratoria ... ...... ....................... ................... ..... ... ..... ... ..... ... ..................................................... 138

9.3

(a) (b)

TRANSNATIONAL DISCLOSURE ORDERS ..................................................................... ... .................. . 99

(a) (b) (c) (d)

What is the "proper law"? ... .... ... .. .. ... ...... ................................. .... .. .. ..... ....... ........ ..... .. .. .. .. .. .. 131 Identifying the proper law of a contract ........................................ .. ...... .. ... ... .. ..... ... ... .. ...... .... 131

9 .2 CHOICE OF LAW fN CONTRACT: SELECTED TOPICS ............................................................................ 134

APPLY ........ ................................................... ... ......... ..... ............................... ..... .... .................... ...... 87 5.6

Territorially limited statutes ......... ..................................... ..... .. ... ........................................... 127 internationally mandatory rules (overriding statutes) ......... ... .... .. ... .. .. ................................. .. 127 Codified choice of law rules ................................................... .............. ..... ........... .................. 128 Statutes silent as to territorial application .................................. ........... ........ .. ...... .... .... ... ..... 128 RENVOI ......................................................................................................................................... 129

9.1

STATUTORY ENFORCEMENT OF COMMONWEALTH JUDGMENTS TO WHICH THE 1934 ACT DOES NOT

Foreign public law ..... .................................... ..... .................... ......... ... .. ...................... .... ... ... .. 125 Public Policy. ............................................... ... ...... ....................... ...... ...... ..... .. ...... .. .. ... ... ... ..... 126 APPLYfNG NEW ZEALAND STATUTES TO CASES WITH FOREIGN ELEMENTS ................................... 126

(a) (b) (c) (d) 9.

Characterisation ..... ................................. .............. ...... ................. ........ ..... ..... ....... ...... ... ....... . 123 Connectingfactors .................... ................ .. ....... .. ... ....... ...... ... .. ... ... ... ..................................... 123 EXCLUSION OF FOREIGN LAW ............ ............................................................................................ 124

(a) (b)

ENFORCEMENT OF AUSTRALIAN JUDGMENTS UNDER THE TTPA .................................................... 84

5.5

CHARACTERJSATION OF ISSUES, AND CONNECTING FACTORS ........................................................ 122

(a) (b)

ENFORCEMENT UNDER STATUTE: THE RECIPROCAL ENFORCEMENT OF JUDGMENTS ACT 1934 ...... 69

Presumptions ............... ... ..... .............. ..... .... ... ............. .. .... ...................................................... 121 Parties to the action ..... .... ... ...... .. .. ...... ... ... ...... ...... .. ...... ..... ..................................................... 121 Set-off and counterclaim .............................................................. ........ ........... ... ....... .............. 121 Types of remedy .......................................................................... ... .. ... ...... .. ...... ............. .. ...... . 121 Property Law Act 2007 ............................................................................. ............. ... ..... .. ... .... 122 Priorities ......... ...... ........ .............................. ...................................... .... ......... .. .... .................. . 122

10.4 ACCIDENT COMPENSATION .................................... ....................................................................... 147

11.

STATUTORY CAUSES OF ACTION .......................................................................................... 149 11.1

ACTION BASED ON A NEW ZEALAND STATUTE FOR A WRONG DONE OUTSIDE NEW ZEALAND ...... 149

11.2 ACTION IN NEW ZEALAND BASED ON A FOREIGN STATUTE ........................................................... 150

12.

Willing witnesses ........ ..... .... ....... ................. .................................... .... .... ....... .. .... ......... .......... 114 Unwilling witnesses ....... ... ........ ....... ........ ........................................................... .................... 115 Provision ofdiscovery from New Zealand, for overseas proceedings ......... ... ............... ......... 116

PROPERTY - AN OUTLINE ....................................................................................................... 153 12.l

CLASSIFYfNG PROPERTY AS MOVABLE OR IMMOVABLE ................................................................ 153

12.2 WHERE IS PROPERTY SITU A TED? ................................................................................................... 153 12.3 TRANSFERS OF MOVABLES ............................................................................................................ 155

(a) (b)

WHAT LAW WILL THE COURT APPLY? ............................................................................... 119

Tangible movables ................................. .. ... ..... ...................................... ... ... ... .... .. ... .. .. ... ........ 155 Intangible movables .. ............................. ... ....... ...... ................................ ....... .. ........................ 156

8.1

OUTLINE ............................................... ...... .. ............ ...... ....................... .......... .......................... ... 119

12.4 TRANSFERS OF IMMOVABLES ........................................................................................................ 156

8.2

THE SUBSTANCE/PROCEDURE DISTfNCTION ..................... ..................................................... .. ....... 119

12.5 JURISDICTION IN RELATION TO IMMOVABLES ................................................................................ 156

(a) (b)

Limitation statutes ... .. .. ... ............ ... ...... .. ..................... .. ................ .. ................. .. .. .......... ........ .. 119 Damages ..... ....... ..... ......... .. ................ .... ... ... .... ................. .... ........................ ... .... ..... ........ ...... 120

13.

DRAFTING CONTRACTS TO TAKE ACCOUNT OF CROSS-BORDER ISSUES ............. 159

13.l CHOICE OF LAW CLAUSES .. ............... ........................................... ............... ............ ................. ...... 159 (a) The pwpose of a choice of law clause ... ....................................... .... ....................... ... .. ... ...... . 159 (b) Draft choice of law clause ............. ... ..................... ......... ... ... ...... ..................... ....................... 160 (c) Variations ........... ............. ... .... .... ......... ............ .... .... .......... .............................................. ... .... 160 13.2 FORUM CLAUSES ............................. ........................ ............ .......................................................... 161 (a) The purpose of a forum clause .... .... .... ...... .............. .......... ........... ... ........ .............................. .. 161 (b) Draft non-exclusive jurisdiction clauses ....... .......... ...... ................ .... .............. ...... .................. 162 (c) Variations on non-exclusive j urisdiction clauses ....... .......... ... ...... ................. .. .. ....... .............. 163 (d) Draft exclusive jurisdiction clauses ... ..... .... ........... ... ........ ... ......... ... .. ..... ... ................ ... ...... .... 164 13.3 AGENTS FOR SERVICE .. .. ......... .. .. .. .. .. ................... ........ .......... .. ...... .. .... ............... ............ ........ ....... 165 (a) The p urpose of an agent for service clause ...... ............. ......... ....... ... .. .... .............. ........ ..... ... ... 165 (b) Draft agent for service clause ..... ... .. .... .... ..... ... .... .... .. .. .. .. ...... ....... ... .. .. ..................... ... ... .. ... ... 165 (c) Variations on agent for service clauses ..... ... .. .. ..... .... ... .. .... ........... ..... ...................... .. ......... ... 166 13.4 ARB ITRATION CLAUSES ........ .... ....... .. ...... ......................... ......... ............ .... .. . ....... ... ........ ......... . ... .. 167 (a) General issues .......... ... .... .... ........ ........ .... ....... ..... ... .... ..... ........... ... .. ......... .... ........... .... .... ... ..... 167 (b) Draft arbitration clause .... ... ...................................... .. .... .... .... ..... ........ .. .. .......... ........... ......... 168 13.5 lNCORPORA T ING CLAUSES IN ONLINE CONTRACTS .................. .... ............ .. .. .. .. .. .. .... .. .. . ............. . ... 169 (a) Making incorporation of clauses effective ......... ........... ........ ........ ........ .................... ....... ... .. .. 169 (b) Other issues....... .... .. .. .... .... .. ...... .. ...... ................... ........ ......... ......... ... ...... ...... .. ....... ..... ..... ... ... . 170 (c) Managing the risks of contracting on line .... .. ... ... .... ... ..... .... ......................... ... ........... .. .... ...... 171

APPENDIX 1 - NEW ZEALAND CASES RELEVANT TO THE SCOPE OF RULE 6.27 HIGH COURT RULES ....................................................................................................................................... 173

Rule 6.27(2)(a) .... ........................ ............................. ..... ... ...... ... ....... .... .... .... .. ..... .. ... ................ .... ..... 173 Rule 6.27(2)(b) ........ ........ .... ..... .... .... .... .................... .. ..... .... ................ ....... .. .. .... ...... ........... ...... ........ l 74 Rule 6.27(2)(c) ........... ......... ................................. .. ... ........ .............. ........ ... ...... ... .. .................. .......... 175 Rule 6.27(2)(d) ........ .... ...... ....... .. ..... ... .... ..... ... .. ... .... .. .............. ...... .... ....... ............. ... .. ... ....... ....... ..... . 175 Rule 6.27(2)(e) ..... .... ................................. .. ....... ... ... ........ ... .. .... .. ... ...... ............. ...... ... .... .. ..... ... ....... .. 175 Rule 6.27(2)(g) ..... ...................... ............ ........ ... ....... ..... .. ..... .. .. .. ... ........... .............. .. ... .... ... ... ... .. ..... .. l 76 Rule 6.27(2)(h) ........ ......................................... .. .... ... ....... ..... ..... ................... ...... .... .... ... ... ... .. .. .... .... . 176 Rule 6.27(2)(i) ............................ ......... ....... ....... ..... .... .... ..... ... .. .. ............... ....... ... ... ... .. .. .. ... .... ... ... .... . l 76 Rule 6.270) ................................... .......... ... .. ..... .. .. .. .. .. ... ...... ... .. .. ....... ........ ....... ....... .... .... ... ....... ... .... 177 Rule 6.27(2)(k) ...... .. .. ... ... ... ...... .. ... .. .... .... .... .... .............. .... .......... .. ... .. .. ........... ....... ..................... .... .. 177 APPENDIX 2 - COUNTRIES TO WHICH TH E RECIPROCAL EN FORC EMENT OF JUDGMENTS ACT 1934 EXTENDS ..................................................................................................... 179 APPENDIX 3 - EXAMPLES FOR DISCUSSION OF CHOICE OF LAW, FORUM AN D AGENT FOR SERVICE CLAUSES ...................................................................................................................... 183 EXAM PLE 1: A DVANCE BY J APANESE BANKS TO N EW ZEALAND BORROWERS .. ........ ..... .. . .... ..... ... ......... 183

Law ..... ... ......... ....... ... .. ...... .. ... ..... .... .... ... .. ... ... .. ............................ ... ........... .... .... ............................ 183 Jurisdiction ..... .... ... ...... ....... ...... .............. ... ..... .... .... .. ....... ... ....... ..... ... ............ ...... ........ ................. .... 183 EXAM PLE 2: A DVANCE BY FOREIGN LENDER TO N EW ZEALAND BORROWE R .... ........ ............... ..... ......... 183 Applicable Law ...... ...... ... ... ............... ............. .... ... ... .. .......... ..... ... ...................... ... ..... .. ...... ........ ..... .. 183 EXAM PLE 3: ADVANCE BY SYND ICATE OF INTERNAT IONAL BANKS TO CAYMAN ISLANDS SUBS IDIARY OF N EW ZEALAND COM PANY, GUARANTEED BY N EW ZEALAND COMPANY .............. .. ........ ................. ....... 183 Jurisdiction .... .... .. .... ....... .. ..... .. ......... ... .... ...... ... ... ... .. .............. ... ... .. ... ............ ...... ... ........ .... ... .... ... .... 183 Law .... ..... ............. .......... ................................ ..... .... ... ..... .... ... ... .. .............................. ... ....... ......... .. 184 EXAMPLE 4: SH ARE SALE AGREEMENT, NEW ZEALAND VENDOR, FOREIGN PURCHASERS AND GUARANTORS .. ... ....... . ... ........... ..... .. .... ..... . ..... ................... .................. . ... . .................. .. .. .. ............... ....... 184 Governing Law.. ....... ......................... ......... .......... .... ...... ... .... ..... ....... .. .. .. .. .... .. ... ..... ..... ... ...... .. .. ........ 184 Submission to Jurisdiction ... ..... .. ...... ... .......... .... ... .. .. .. .. .. .......... ... ........ ... ............ ..... ....... .. ........... ..... 185 Process Agent... ..... .. .... .... .... ................................ ....... ............. ............... ... ... .. ........... ..... ......... .. ....... . 185 EXA MP LE 5: LEASE BY N O RW EGIAN LESSO R TO N O RWEG IAN LESSEE, LESSEE A SUBS IDIARY OF AN ENG LI SH CO MPANY AND ACQU ISITION OF ASSET FINANCED BY ENGLIS H BANKS W ITH SECURITY INTEREST IN LEASE ..... ... ........ . .... . .. ..... ... .. ......... ... . .... ............. .............. .. ............ .................... .. ... .... ............. . .......... 185 EXAMPLE

6: FAC ILI TY

PROV ID ED BY SYND ICATE OF UK LENDERS TO A NUMBER OF RELATED BORROWER

COMPAN IES, INCLU DI NG ONE ENG LI SH COMPANY, FOR PURCHASE OF A IRCRAFT ........ .. ................... .. ..... 186

Law, Jurisdiction .... ... ... .... .. .... ........... ...... .... ........... ...... ......... .... ... .......... ......... ...... ... .. ..... ....... .... .. ..... 186 7: F INANC ING ARRANGEMENTS INVOLVING NZ AND US PART IES .. . ......... .. .............. ..... ... .... . . 187 Service ofProcess and Jurisdiction; Waiver ofimmunity ........... .. ........... ........ .... ........ .......... .......... 187

EXAMPLE

EXAMPLE

8:

SALE AND PURC HASE AGREEMENT INVOLV ING AUSTRALIAN VENDOR (W ITH N Z SUB) AND

NZ PURC HASER ......... .......... ......... ..... ............. .. . .............. ................... ............. .. ......... .................... . .... . .. 188

Governing Law .... ..... ... ......... ... ................. ......... .............. .. ... ...... .......... ... ....... .. ......... .... ... ................ 188 Submission to Jurisdiction ...... ...... ... .... .............. ........ ......... ...... ..... ....... ... ....... ... ...... ............... ....... .. . 188 Vendor's Process Agent .. .... .... ... ......................... .... .. ............... .. .... ........ ............ ...... ..... .... ...... ...... .. .. 189 EXAMPLE 9: TERMS OF USE OF MSN WEB SITE AND SERV ICES ..... ............. ..................... . ......... ...... ....... 189 EXAMPLE 10: XTRA TERMS OF SERV ICE FOR BUS INESS CUSTOMERS ..... ..... . . ... ............ ..... . ....... ... .. .. ...... 190 2 7. New Zealand Law Applies ............ .... ................... .... .............. ...... .... .... ........ ............... ... .. ... ..... ... 190 DISCUSSION PROBLEM S .................................................................................................................... 191 l : J URISD ICTION, EV ID ENCE, ENFORCEMENT: TRANS -NAT IONAL FRAUD .... . ..... .. 19 1 2: TRANSNATIONAL CONTRACTS .......... ....... .. ...... ............. ... . .... .... .. ... .. ... ........ ... 193 DI SCUSS ION P ROBLEM 3: D RAFTING CONTRACTS ............................. ..................... .. .............. .. .... . .... ... ... 195 DI SCUSS ION PROBLEM

D ISCUSS ION P ROBLEM

Goddard and Mclachlan • Introduction

1.

1.1

INTRODUCTION

What is "private international law"?

Transactions and people cross borders with ever greater frequency. The Internet (along with other developments in technology) has made it simpler and less expensive than ever before to communicate across borders, and to deal with people anywhere in the world. Global trade continues to grow, and international air travel continues to increase dramatically. As the practical importance of borders diminishes, it is increasingly common for lawyers to encounter transactions, relationships and disputes that have connections with more than one country. These cross-border situations raise special issues which are not encountered in a purely domestic context. New Zealand lawyers need to have at their disposal the legal tools required to address these cross-border issues. Private international law, or "conflict of laws" as the subject is also known, is the body of law concerned with the issues which arise where transactions, relationships or disputes have connections with more than one country. The subject is concerned with topics as diverse as the jurisdiction in which billion dollar financing agreements may be enforced, the risks facing an Internet service provider (ISP) in relation to untrue statements on a website that can be accessed from anywhere in the world, and trying to enforce a New South Wales District Court judgment against a judgment debtor living in New Zealand. Where a transaction or relationship or dispute has links with more than one country, the special issues which need to be addressed include: (a) Where will any dispute be determined? (b) Which country's law will be applied to determine issues that arise in the course of the dispute? (c) Is effective interim relief available, pending trial? To what extent can interim orders made in one country be effective in relation to persons or assets outside that country? Will courts in country A grant interim relief in support of proceedings in country B? (d) How can evidence be obtained from a person in country A for use in a trial in country B? Can documents in country A, or which are controlled by a person in country A, be obtained on discovery in connection with proceedings in country B? (e) If a judgment is given or an order is made in a court in country A, what is the effect of that judgment or order in country B? The rubric "private international law" does not refer to a body of international rules which are the same in every country. The domestic law of each country contains rules which determine how the questions set out above will be answered in the courts of that country. Private international law varies from country to country. But there are substantial similarities between the private international law rules of common law countries, and the development of the common law in this field has been strongly influenced by civil law concepts. The development of New Zealand's private international law, like that of many other countries, also reflects the existence of a number of important international agreements and coordination initiatives in relation to aspects of private international law, which have achieved a degree of consistency among some countries on certain issues.

1

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Introduction

New Zealand's private international law seeks to answer the questions set out above where they fall to be resolved by a New Zealand court. For the purposes of a study of New Zealand private international law, the questions can be recast as follows: (a) Will a particular dispute be decided by a New Zealand court? (b) Which country's law will be applied by a New Zealand court when determining issues that arise in the dispute? (c) What interim relief will a New Zealand court grant in respect of persons or assets outside New Zealand? Will a New Zealand court grant interim relief in support of foreign proceedings - and if so, in what circumstances? (d) When can a New Zealand court accept evidence from a person outside New Zealand? What can be done to compel the production of documents outside New Zealand, or the provision of evidence by a person outside New Zealand? Will a New Zealand court assist in the taking of evidence for use in foreign proceedings? Will a New Zealand court provide assistance in connection with discovery of documents in New Zealand, for the purpose of foreign proceedings? (e) What is the effect in New Zealand of a judgment or order of a foreign court? The first of these issues is the question of jurisdiction. Where a dispute arises in an international context, with parties resident in different countries, and performance of obligations possibly taking place in yet another country, it is important to know which court is likely to determine the dispute. New Zealand private international law determines when a New Zealand court has jurisdiction to determine a dispute, and also the circumstances in which a New Zealand court may decline to exercise its jurisdiction because a dispute should be determined in another court that is also able to hear the case. New Zealand private international law is also concerned with the issues that arise in New Zealand proceedings where the same dispute is the subject of concurrent proceedings in another country. If a New Zealand court does have jurisdiction to hear a dispute, it then has to decide which country's law will determine the various issues that arise. This is the question of choice of law. There is in general no separate set of substantive rules which apply in international cases: the choice of law rules of "private international law" are rules of New Zealand law which enable a New Zealand court to determine which system of law should be used to resolve a particular issue before a New Zealand court. The system of law which is applied to determine each substantive issue must be a system of law in force either in New Zealand or in another country. It cannot be emphasised too strongly that the question of jurisdiction is quite independent of the question of which law applies. New Zealand courts can, and do, decide cases in which issues are governed by foreign law.

The question of interim relief is of great practical importance in many cross-border cases. A number of special issues arise where interim relief is sought in New Zealand proceedings against a person outside New Zealand, or in relation to assets or information held outside New Zealand. And New Zealand courts are increasingly being asked to make interim orders in support of the determination of substantive proceedings before a foreign court.

2

Cross-border disputes can raise difficult practical questions in relation to evidence and discovery across borders. These evidence issues are less common than questions of jurisdiction or interim relief, but are of increasing importance with the growth in volume of litigation involving foreign parties and witnesses, and New Zealand businesses which operate in more than one country. The fifth key private international law issue which concerns New Zealand lawyers is the enforcement and recognition in New Zealand ofjudgments and orders offoreign courts. It is increasingly common for a judgment given overseas to be brought to New Zealand for enforcement against a New Zealand resident or a New Zealand business, or against a foreign defendant's assets in New Zealand.

1.2

The sources of New Zealand private international law

New Zealand private international law comprises a mix of common law rules and legislation. New Zealand's common law rules of private international law are derived from the English common law. Decisions of English and other Commonwealth courts are of considerable assistance to a New Zealand court considering these issues. And some of the legislative rules in New Zealand are modelled on English statutes. As mentioned above, the law in relation to some aspects of private international law in New Zealand results from international legal coordination, through treaties, model laws and other instruments. The relevant instruments, the travaux preparatoires, and court decisions and commentaries from other countries all play an important role in understanding and interpreting the relevant New Zealand provisions. But New Zealand is gradually developing an indigenous system of private international law, as the body of relevant New Zealand case law develops and as legislation gives effect to ANZCERTA, and other trans-Tasman cooperation arrangements. In some areas the common law continues to apply and develop in New Zealand although in England it has been replaced with statutory provisions implementing European Union obligations. New Zealand law has also developed separately from Australian law in a number of respects, partly as a result of the fact that Australia is a federal state, and so has a law of conflicts which is to some extent constitutionally based. The two most significant changes in New Zealand's private international law in the last decade are: •

the new High Court Rules, in force from 1 February 2009. The new Rules have introduced a significantly improved regime for service of proceedings abroad, and have for the first time enabled New Zealand courts to grant interim relief in support of foreign proceedings;

•

the Trans-Tasman Proceedings Act 2010 (TTPA), which is expected to come into force in the second half of 2012. The TTPA fundamentally changes the rules for service of New Zealand proceedings in Australia, and enforcement of Australian judgments in New Zealand. The corresponding Australian legislation does the same for service of Australian proceedings in New Zealand, and enforcement of New

3

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Introduction

Zealand judgments in Australia. Trans-Tasman litigation will be much simpler, and less expensive, under the new regime.

1.3

The TTPA- an overview

The vast majority of cross-border issues that New Zealand lawyers encounter arise in relation to Australia. Despite the close ties between New Zealand and Australia, the law of each country has for most purposes treated the other as a foreign country to which the standard rules on service of proceedings and enforcement of judgments will apply. However the TTP A, which as noted above is expected to come into force in the near future, will substantially simplify trans-Tasman litigation. The provisions of the TTP A in relation to particular topics, such as service of proceedings and enforcement of judgments, are discussed in detail in later chapters of this booklet. But a brief introduction to the TTP A is appropriate at this stage, given its practical significance and the range of issues it addresses. In 2003 the Prime Ministers of Australia and New Zealand established a Working Group to look at the potential for adoption of a trans-Tasman regime for allocation of forum and enforcement of judgments, based on the Australian inter-state arrangements set out in the Service and Execution of Process Act 1992 (Cth) (SEPA). 1 The Working Group reported in 2006, recommending a trans-Tasman regime broadly along these lines. 2 In the words of the Working Group Final Report: 3 The Working Group's central recommendation is that a "trans-Tasman regime", modelled on the Service and Execution of Process Act 1992 (Cth), be introduced as between the two countries. The proposed regime would allow initiating process in civil proceedings issued out of a court in Australia or New Zealand to be served in the other country, with the same effect as if service had occurred in the other country with the same effect as if service had occurred in the country of issue. Currently, a range of judgments of Australian and New Zealand courts can be registered and enforced by a court in the other country. We propose that the range of enforceable judgments be broadened, and that judgments only be refused enforcement if they conflict with the public policy of the other country. The proposed trans-Tasman regime would be supported by wider use of teleconference and video link technology to enable remote appearances in transTasman proceedings. The Working Group recommends that, for appearances in civil proceedings, a party in the other country (and their lawyer) be allowed to appear by telephone or video link with the leave of the court in most cases, and as ofright in an application for a stay of proceedings, on the grounds that a court in the other country is more appropriate to decide the dispute. Some of the Working Group's recommendations would improve regulatory enforcement between Australia and New Zealand. Civil pecuniary penalties from one country would be enforceable in the other unless specifically excluded. Criminal fines imposed for certain regulatory offences in one country would be enforceable in the other in the same way as a civil judgment debt.

2

For the genesis of this work, see David Goddard "Trans-Tasman Legal Coordination - The Next Frontiers" (paper presented to Australian and New Zealand Society of International Law Conference 2003 , Wellington, New Zealand) available at http://law.anu.edu.au/anzsil/conferences/2003/2003proceedings.pdf. Trans-Tasman Working Group Trans-Tasman Court Proceedings and Regulatory Enforcement (Final Report, December 2006) available at http://www.ag.gov.au/Documents/5Trans-Tasman%202006.pdf. At 3.

4

In July 2008 the two Governments signed the "Agreement between the Government of New Zealand and the Government of Australia on Trans-Tasman Proceedings and Regulatory Enforcement". The Preamble to the Agreement includes the parties' acknowledgement of their confidence in each other's judicial and regulatory institutions and their desire to establish a new trans-Tasman regime to further streamline civil court proceedings. Legislation to implement the Agreement has been enacted in both New Zealand (the TTPA) and Australia (the Trans-Tasman Proceedings Act 2010 (Cth)). The regime will come into force when the necessary rules of court have been finalised in both countries. The purpose of the TTP A is described in the Act as "to streamline the process for resolving civil proceedings with a trans-Tasman element in order to reduce costs and improve efficiency; and minimise existing impediments to enforcing certain Australian judgments and regulatory sanctions; and implement the Trans-Tasman Agreement in New Zealand law. " 4 The Agreement may be taken into account in interpreting the TTP A, in accordance with the usual principles that apply to legislation giving effect to an international instrument. Key features of the new regime include: •

a plaintiff can serve civil proceedings issued in one country in the other country, without the need to establish any particular connection between the proceedings and the forum;

•

the defendant can apply for a stay of proceedings on the grounds that a court in the other country is the more appropriate court for the proceeding;

•

a judgment from one country can be registered in the other. It will have the same force and effect, and can be enforced, as a judgment of the court where it is registered;

•

a judgment may be refused enforcement in the other country only on public policy grounds. Other grounds, such as breach of natural justice, will have to be raised with the original court;

•

a judgment can only be varied, set aside or appealed in the court of origin. The court of registration is able to stay enforcement to allow this to happen;

•

all final civil judgments, including non-money judgments, will come under this regime (with a small list of exceptions, and the potential to add to these by agreement over time);

•

civil penalty judgments are enforceable under the regime, unless expressly excluded (there is provision for a "negative list" to be adopted, and added to over time);

•

fines for breach of specified regulatory statutes are also enforceable under this regime, as if they were civil judgments in favour of the State in which they were rendered (there is a "positive list" which can be added to over time);

•

increased provision for parties and counsel to appear by video or telephone link from the other country. There is a right to appear remotely for applications for a stay

4

Trans-Tasman Proceedings Act 2010, s 3( 1).

5

Goddard and Mclachlan • Introduction

NZLS CLE Seminar • Private International Law

(without the need for counsel to be admitted in the forum hearing the application). For other remote appearances, the leave of the court is required; •

Australian and New Zealand courts have authority to grant interim relief in support of proceedings in the other country's courts.

The existing arrangements for giving evidence remotely between the two countries, which have been in place for some years now and which work well, will be expanded and streamlined in a number of respects when the legislation comes into force.

The basic approach throughout this booklet is: (a) to set out briefly the fundamental principles in relation to each topic considered; (b) to indicate where a more detailed treatment of the topic may be found - steering New Zealand lawyers towards relevant texts, and away from less helpful (or completely irrelevant) ones; (c) to draw attention to recent developments; (d) to identify any relevant New Zealand authorities which may be of assistance. The textbooks referred to most frequently are:

1.4

The scope of this booklet

This booklet is intended to provide a guide to private international law in New Zealand, from a practical perspective. It focuses on civil and commercial dealings across borders. It does not address the many private international law issues that arise in the context of family law and succession. The aim is to provide a conceptual framework for thinking about cross-border legal issues, and some practical assistance in applying the relevant principles in the context of cross-border transactions and cross-border disputes. The booklet also does not deal with international arbitration, a very large subject in itself. Useful sources of guidance on cross-border arbitration issues include David Williams QC and Amokura Kawharu Williams and Kawharu on Arbitration (LexisNexis NZ, Wellington, 2011) and Nigel Blackaby, Constantine Partasides, Alan Redfern and Martin Hunter Redfern and Hunter on International Arbitration (5th ed, Oxford University Press, Oxford, 2009). A central goal of this booklet is to assist New Zealand lawyers to identify the relevant rules of private international law when cross-border issues arise. This can be far from simple in New Zealand today. There is no current New Zealand private international law textbook. 5 The Laws of New Zealand "Conflict of Laws: Jurisdiction and Foreign Judgments" title provides detailed commentary in relation to aspects of New Zealand private international law - but does not address questions of choice of law, or interim relief, or cross-border evidence and discovery. The "Conflict of Laws: Choice of Law" title contains a fairly detailed discussion of choice of law principles, and touches on cross-border evidence and discovery issues. It is a useful source of references to New Zealand case-law on choice of law issues. However the format of Laws of New Zealand is not well suited to exploration of the complex and at times uncertain issues that arise in the choice of law domain.

•

Lawrence Collins (ed), Dicey, Morris & Collins on the Conflict of Laws (14th ed, Sweet & Maxwell, London, 2006)) (Dicey)

•

The Laws of New Zealand "Conflict of Laws: Jurisdiction and Foreign Judgments" (Laws NZ)

•

Peter North, James Fawcett and Janine Carruthers, Cheshire, North & Fawcett: Private International Law (14th ed, Oxford University Press, Oxford, 2008) (Cheshire & North)

•

Martin Davies, Andrew Bell, and Paul Le Gay Brereton Nygh 's Conflict of Laws in Australia (8th ed, LexisNexis, Australia, 2010) (Nygh)

Dicey is generally regarded as the leading text in this area, and is often cited as an authority in its own right. It is always useful to refer to it on issues where the common law rules still apply in both England and New Zealand, or where the statutory rules are to like effect. Current editions of Dicey also continue to cite and analyse relevant New Zealand authority. However, care needs to be taken when using current editions of Dicey, as in a number of areas New Zealand law is now very different from English law. Old editions of Dicey should not be thrown away. They are very useful in New Zealand!

English and Australian textbooks are useful, but are by no means an infallible guide for New Zealand lawyers. When consulting them, it is important to keep in mind the real possibility of differences between the law of New Zealand and the laws of other common law countries.

B D Inglis, Conflict of Laws (Sweet & Maxwell (NZ), Wellington, 1959) is the only New Zealand text that has been published to date: it concentrates principally on family law topics, and the law has changed significantly in these areas, but the general sections are still of interest. The 4th edition of P E Nygh 's Conflict of Laws In Australia (Butterworths, Sydney) published in 1984 includes comprehensive references to New Zealand statutes and decisions up to 1983, but subsequent editions have not included New Zealand material except where relevant for the purposes of Australian law.

6

7

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Why Bother with Private International Law?

2.

WHY BOTHER WITH PRIVATE INTERNATIONAL LAW?

When lawyers encounter the subject of private international law for the first time, their reaction is often that it is arcane and difficult, and of no practical importance to them in their daily work. In fact, it is not an especially difficult subject, and neither commercial lawyers nor litigators can afford the luxury of ignoring it. The rise of the Internet, in particular, has dramatically increased the number of dealings that have links with more than one country, and thus raise private international law issues: this is no longer a field reserved for specialists. Private international law issues arise in every commercial transaction that is not purely domestic. A solicitor acting for a client involved in importing, exporting, advertising or selling thorough a website accessible overseas, or any other international dealings, needs to be in a position to advise that client about appropriate provisions to include in all contracts entered into. Choice of forum and applicable law provisions in these contracts will have a major impact on where and how any disputes will be determined, and on the law that will be applied to determine them - and thus on the cost and the substantive outcome of those disputes. For example, New Zealand law in relation to cancellation of contracts for breach as set out in the Contractual Remedies Act 1979 differs in important ways from the law in Australia. Suppose you have a client who has entered into a franchise contract with a Sydney-based software company, under which your client markets and provides support for the software in New Zealand. If your client telephones you to ask whether he or she can terminate the contract and start distributing a competitor's products, and what steps must be taken to do so, it is crucial to know whether these issues are governed by New Zealand law, on which you can advise, or New South Wales law, on which you will need to seek advice. An error could be extremely expensive. Nor will your client thank you if the advice is that the question of which law applies is a complex and uncertain one, when a simple choice of law clause in the initial contract could have removed any uncertainty. Your client will also want to know if any proceedings would be brought in New Zealand or in Australia - once again, the answer that this is far from certain will not be welcome, especially once you explain that the position would have been somewhat clearer had the contract included a suitable forum clause. Litigators acting in proceedings with overseas parties also need to be familiar with the relevant substantive and procedural requirements. A failure to serve documents on an overseas defendant properly, first time round, may result in considerable expense and delay, and additional unnecessary interlocutory hearings and foreign agency costs. The final reason for taking an interest in the subject is that it is extremely rewarding: the questions that arise, while sometimes detailed, often involve fascinating issues of principle. And some of the most peculiar and intriguing cases you will ever read - or, possibly, act in - will be cases involving private international law issues.

8

9

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • How Courts Deal with Foreign Law

3.

HOW COURTS DEAL WITH FOREIGN LAW

The choice of law rules which a New Zealand court uses to decide which system of law should be applied to determine a particular issue are discussed in sections 8-12 below. At this stage, however, it may be useful to consider briefly how a New Zealand court goes about applying foreign law, if the court considers that it is relevant, as the question may arise in the context of objections to New Zealand jurisdiction, or in the context of enforcement of foreign judgments.

3.1

Why do New Zealand courts refer to foreign law?

There has been a great deal of debate among jurists about the reasons why a New Zealand court will apply foreign law to some disputes, rather than New Zealand domestic law. Indeed, there has been a great deal of writing on the subject of whether a New Zealand court can properly be said to "apply" foreign law, or whether there is some other more appropriate description of the process. Cheshire & North provides a clear and interesting summary of these issues at 23-37. A brief discussion of the historical development of the subject appears at 20-22 of that text. The approach of English and New Zealand judges to these issues appears to be inspired less by theoretical concerns than by a pragmatic desire to reach results which are just, predictable, and consistent. In international transactions, as in all commercial matters, it is highly desirable that the obligations of the parties should be as clear and predictable as possible: this will not be the case if the content of these obligations might be found to vary depending on where a dispute is litigated. So consistency of result between forums is one goal to which judges often refer. Another important goal is party autonomy: if parties to a transaction agree that a particular regime should govern their dealings, that choice should normally be respected by the forum unless it is repugnant for reasons of public policy. In general, it can be said that the courts seek to apply the rules that the parties would reasonably have expected to apply, and to ensure so far as possible that the same rules will be applied wherever the litigation might occur.

3.2

The ascertainment of foreign law

The common law regards questions of foreign law as questions of fact, to be pleaded and proved by appropriate expert evidence. That is still the basic position in New Zealand, subject to a number of statutory relaxations of the requirement for expert evidence. 6 If a New Zealand court determines that the question of whether interest is payable on overdue instalments under a contract for the sale of goods is governed by German law, for example, the court will hear evidence from suitably qualified experts - normally practising lawyers in the relevant jurisdiction7 - who will put any relevant statutory material or precedents before the court and explain the effect and significance of that 6

10

Mount Cook (Northland) Ltd v Swedish Motors Ltd [ I 986] 1 NZLR 720; Star/ink Navigation Ltd v The Ship "Seven Pioneer" (2001) 16 PRNZ 55. The statutory exceptions to the need for expert evidence are set out in ss I 44 and I 48 of the Evidence Act 2006, and discussed in sections 3.3 and 3.4 below. The New Zealand courts have taken a broader approach to the question of who may give evidence on foreign law than have the English courts: it appears that an academic with the relevant background and experience is also acceptable as an expert (Obrist v Ruedi SC Hamilton A202/73, 14 July 1977, and see R v Ford (1913) 32 NZLR I 2 I 9 and R v llich [ 1935] NZLR 90).

11

Goddard and Mclachlan • How Courts Deal with Foreign Law

NZLS CLE Seminar• Private International Law

material, and how it would be applied by a German court. The New Zealand court then makes findings of fact in relation to the German law, and applies those findings to the contract in question. The expert on foreign law is often asked to apply the relevant law to the fact situation before the court, as it is difficult to explain the law in a vacuum. 8 An example of this process is the decision of Staughton J in Attorney-General (NZ) v Ortiz [1982] QB 349. One issue in that case was the effect under New Zealand law of s 12 of the Historic Articles Act 1962. Each side called evidence in the English court as to New Zealand law: the New Zealand government called Dr Inglis QC (as he then was) and the defendant called Mr Thomas QC (as he then was). Staughton J discussed the evidence of Dr Inglis and Mr Thomas on various points, deciding in each case whose view he preferred. The Judge's analysis of the "evidence" is in fact a judicial weighing of the merits of two legal arguments, and his statements as to which evidence he "prefers" (seep 360 for an example) are in all but name conclusions of law.

As the judgment of Staughton J illustrates, foreign law is a peculiar question of fact. This is reflected in New Zealand law in a number of ways:

(a) evidence given by an expert; or (b) a copy of the statute or other written law, proclamation, treaty, or act of State that is certified as a true copy by a person who might reasonably be supposed to have the custody of the statute or other written law, proclamation, treaty, or act of State; or (c) any document containing the statute or other written law, proclamation, treaty, or act of State that purports to have been issued by the government or official printer of the country or by authority of the government or administration of the country; or (d) any document containing the statute or other written law, proclamation, treaty, or act of State that appears to the Judge to be a reliable source of information. (2) In addition, or as an alternative, to the evidence of an expert, a party may offer as evidence of the unwritten or common law of a foreign country, or as evidence of the interpretation of a statute or other written law or a proclamation of a foreign country, a document(a) containing reports of judgments of the courts of the country; and

(a) if a party relying on a rule of foreign law in relation to a particular issue fails to prove the foreign law to the satisfaction of the New Zealand court, the court will apply New 9 Zealand law. In the example of the contract for sale of goods governed by German law considered above, if the plaintiff fails to prove the relevant rule of German law, the court will not simply find that there is no rule entitling the plaintiff to interest on unpaid instalments: it will look to New Zealand law and award interest if it would be payable in these circumstances under New Zealand law. This is very different from the usual consequence for a plaintiff of failing to prove an ingredient of its claim;

(3) A party may offer as evidence of a statute or other written law of a foreign country, or of the unwritten or common law of a foreign country, any publication-

(b) an appellate court may be more willing to reconsider findings as to foreign law than other findings of fact ( Cheshire & North at 118-119, and see Attorney-General (NZ) v Ortiz [1984] AC 1 (HL));

(4) A Judge is not bound to accept or act on a statement in any document as evidence of the law of a foreign country.

(c) in the rare cases where questions of foreign law arise in a jury trial, the questions are determined by the Judge rather than the jury (Judicature Act 1908, s 19C);

(5) A reference in this section to a statute of a foreign country includes a reference to a regulation, rule, bylaw, or other instrument of subordinate legislation of the country.

(d) s 144 of the Evidence Act 2006 provides for the court to take judicial notice of foreign law in certain circumstances. This provision is discussed below.

(6) Subpart 1 of Part 2 (which relates to hearsay evidence) does not apply to evidence offered under this section.

For a more detailed consideration of the proof of foreign law, and qualification of expert witnesses on foreign law, see Dicey chapter 9.

3.3

Section 144 of the Evidence Act 2006

Section 144 of the Evidence Act 2006 sets out the different forms of evidence of foreign law that a party may seek to rely on: 144 Evidence of Foreign Law (1) A party may offer as evidence of a statute or other written law, proclamation, treaty, or act of State, of a foreign country-

8 9

This was a common practice despite the former rule of evidence that an expert cannot give an opinion on the ultimate issue to be determined by the court - a rule now abolished by s 25(2)(a) Evidence Act 2006. Attorney-General for England and Wales v R [2002] 2 NZLR 91 at [32]; Mount Cook (Northland) Ltd v Swedish Motors Ltd [1986] I NZLR 720 at 726-727; Ho Wah Genting International Ltd v Kasuya (1998) 13 PRNZ 19 at 25; Star/ink Navigation Ltd v The Ship "Seven Pioneer" (2001) 16 PRNZ 55 para 12

12

(b) that appears to the Judge to be a reliable source of information about the law of that country.

(a) that describes or explains the law of that country; and (b) that appears to the Judge to be a reliable source of information about the law of that country.

Section 144 was considered by Heath J in Cheon v Attorney-General HC Auckland CIV2007-404-7669, 8 July 2008. The Judge noted thats 144 (l)(a) permits a Court to act on expert evidence in determining foreign law. However, the disjunctive way in which means of proof are set out in s 144(1) demonstrates that expert evidence is not always required. Section 144(1)(b), (c) and (d) each enable a Judge to rely on documents (whether primary or not) that evidence foreign law. As s 144(1)(d), (2) and (3) suggest, the touchstone is the need for "reliable" information to determine what the relevant foreign law is. In Cheon Heath J was required to interpret a provision of the Civil Code of the Republic of Korea in order to determine an inheritance issue regarding an adopted child. The Judge found that there was a need to interpret the Code in order to determine the inheritance issue. Section 144(2) provided for only two types of evidence on an issue of interpretation of a statute: evidence from an expert, or a document that contained reports of judgments of the courts of the relevant country that appeared to the Judge to be a reliable source of information about the law of that country. Heath J held that he was not able to embark on the interpretation exercise without either of these forms of evidence to assist him. In particular, a translation of the statute's text from Korean into English did not of itself 13

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

solve the interpretation point. The hearing was adjourned for further evidence on the issue.

4.

In Cheon v Attorney-General (No 2) HC Auckland CIV-2007-404-7669, 21 August 2008, the Judge was able to determine the interpretation point, having received an affidavit from a suitably qualified lawyer in Korea that outlined the relevant law in Korea. As Cheon illustrates, expert evidence explaining foreign law will often be necessary or desirable despite the ability to take judicial notice of foreign law under s 144. For example, the assistance of an expert may be needed to explain whether a particular report or text represents the current foreign law. The absence of an expert may also affect the weight given to material introduced under s 144. In SHC Corporation v O'Brien (1991) 3 PRNZ 1, counsel sought to refer to the American Law Institute's Restatement of the Law (2nd) Conflict of Laws as evidence of the law in the United States of America on the recognition and enforcement of foreign judgments. Master Williams QC (as he then was) expressed the view that the court should proceed with caution in deciding whether to accept statements in a textbook as evidence of another country's laws, particularly in the absence of evidence as to the status accorded to the Restatement in the United States, and whether the passages referred to represented the current law in that country. The Court also noted that in the absence of evidence on the hierarchy of the various state and federal courts in the United States, the Court was uncertain which of the decisions noted in the Restatement are binding on which others. The SHC Corporation decision illustrates the difficulty the court will have in relying on s 144 (at least in relation to jurisdictions the law and legal system of which is not familiar to New Zealand lawyers) and forming a view as to foreign law, without the assistance of an expert to explain the relevance, significance and status of the material placed before the court. Even in relation to jurisdictions which are more familiar to New Zealand lawyers and judges, care is required in relying on s 144 materials without expert assistance in their interpretation and application. In Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 NZLR 289, a decision under the pre-2006 legislation governing evidence of foreign law, the Privy Council held that it was not appropriate for a New Zealand court to make findings about disputed questions of New South Wales law that were uncertain and controversial in that jurisdiction without the assistance of expert evidence on those questions. For further discussion of s 144 see Richard Mahoney and others The Evidence Act 2006: Act and Analysis (2nd ed, Thomson Reuters, Wellington, 2010) at 490 to 492.

3.4

Admissibility of Australian public documents

Section 148 of the Evidence Act 2006 provides for the admissibility in New Zealand proceedings of a wide range of Australian public documents. Subsections (1) and (2) provide for the admissibility of public documents that are admissible in evidence under an Australian Act; and subsection (3) provides that a public document that can be admitted in evidence under Australian law without proof of an official seal, stamp or signature can be admitted in New Zealand without such proof.

4.1

.

The nature of the issues

A New Zealand client who wishes to bring proceedings will normally prefer to do so in New Zealand, for reasons of convenience, expense and familiarity with the "ground rules". For the same reasons, New Zealand clients would normally prefer to defend proceedings in New Zealand, rather than overseas, and overseas clients will often prefer to defend proceedings in their home jurisdictions, rather than in New Zealand. Where parties to litigation are not all based in the same country, the question of where their dispute is to be determined is an important tactical issue which will affect the cost of litigation and may affect the ultimate resolution of the dispute. Determining the appropriate court in which the litigation will take place will often be the subject of careful consideration by parties, and may be the subject of interlocutory argument in one or more countries. The question of where a dispute will be determined, and in particular whether the New Zealand High Court will entertain it, turns on two issues: (a) jurisdiction: Does the court have the power to hear and determine the case? In New Zealand, jurisdiction depends on service: if a defendant is properly served with New Zealand proceedings, the High Court has jurisdiction to hear and determine the case; 10 (b) forum conveniens: In which court can the matter most appropriately be tried, in the interests of the parties and for the ends of justice? If New Zealand is not the forum conveniens, the High Court may refuse leave to serve proceedings out of New Zealand, if leave is required, or may stay or dismiss a proceeding which it has jurisdiction to hear and determine. The issues of jurisdiction and forum conveniens are conceptually distinct. Some factors are however relevant to both. These issues arise with some frequency in New Zealand, and there is a significant number of relevant authorities. The circumstances in which New Zealand practitioners commonly encounter these issues are: (a) acting for a plaintiff who wishes to sue a defendant not present in New Zealand; (b) acting for a defendant not present in New Zealand upon whom New Zealand proceedings have been served; (c) acting for a New Zealand defendant upon whom proceedings in the courts of another jurisdiction have been served. In some circumstances, a New Zealand defendant may prefer a dispute to be resolved in the courts of another jurisdiction. If that defendant is sued in New Zealand, questions of forum non conveniens will arise, although the court's jurisdiction cannot be challenged. An underlying theme in the selection of a forum by a plaintiff, and the defendant's decisions about what steps to take, is enforceability: will any judgment obtained be enforceable against the defendant? This factor will be of primary practical importance to 10

14

JURISDICTION AND FORUM CONVENIENS - WHICH COURT WILL A DISPUTE BE HEARD IN?

The discussion in this paper is confined to jurisdiction in actions inter par/es. The principles governing jurisdiction in an Admiralty action in rem are different: see Dicey Chapter 13, the Admiralty Act 1973 and the Admiralty Rules 1975, and the Admiralty section of the Australian and New Zealand commentary on Halsbury's Laws of England .

15

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

NZLS CLE Seminar• Private International Law

(within the meaning of section 2 of the Companies Act 1993) that is served in New Zealand must be personally served in accordance with section 389 of the Companies Act 1993;

a plaintiff in selecting the jurisdiction in which to sue, and to a defendant faced with the choice of whether or not to defend proceedings. Issues of enforceability also have an impact on the court's approach to questions of jurisdiction and forum conveniens.

4.2

Acting for a plaintiff who wishes to sue a defendant not resident in New Zealand

A claim can be heard in New Zealand only if the New Zealand court has jurisdiction over the intended defendant. Under New Zealand law, like English law, jurisdiction in an action inter partes depends solely on valid service on the defendant. 11 Thus in order to establish jurisdiction it is necessary to serve the intended defendant validly, in accordance with New Zealand law and in particular the High Court Rules or District Court Rules, as • 12 appropnate. (a)

Service in New Zealand

However international the flavour of proceedings, the High Court will have jurisdiction if the defendant is present in New Zealand, and is served in New Zealand. It is always possible to establish jurisdiction by serving proceedings in New Zealand on: (a) an individual defendant who is present in New Zealand, however temporarily. 13 Provided service is effected in New Zealand, in accordance with New Zealand law, the High Court will have jurisdiction over that individual; 14 (b) a company incorporated in New Zealand. Section 387(1) of the Companies Act 1993 sets out the only methods for valid service in New Zealand on New Zealand companies (s 387(2)). Service will be assisted by the 1993 Act's requirement that a New Zealand company have an address for service (s 192), any change of which must be notified to the Registrar (s 193), as well as a registered office in New Zealand (ss 186 and 187); 15 (c) an overseas company which is registered under Part 18 of the Companies Act 1993. Section 389(1) of the 1993 Act sets out the only methods for valid service in New Zealand on overseas companies (s 389(2)). 16 Service on a person nominated under s 389(1)(b) will be effective even if the company has given notice that it has ceased to have a place of business in New Zealand: Rome v Punjab National Bank (No 2) [1989] 17 2 Lloyd's Rep 354 (CA). High Court Rule 6.13 provides that an overseas company 11 12

13

14

15

16

17

See Cockburn v Kinzie Industries Inc (1988) I PRNZ 243 ; Dicey r 22(1). The discussion in this section refers primarily to case law in relation to High Court proceedings, but is equally applicable to a claim before a District Court, except where differences are identified below. An exception to this is where the defendant has been enticed into the jurisdiction fraudulently, in order to effect service (Dicey at 346; Cheshire & North at 355). Dicey at 346; Cheshire & North at 354-355, Colt Industries Inc v Sarlie [ 1966] I WLR 440 (CA), Maha ranee of Baroda v Wildenstein [ 1972] 2 QB 283 (CA) at 292 and 294, Carberry Exports (NZ) Ltd v Krazzy Price Discount Ltd ( 1985) I PRNZ 279 at 280; Broadlands Ltd v Mace ( 1992) 5 PRNZ 632. High Court Rules, r 6. 12 simply requires service on a corporation in accordance with s 387. Note also the detailed requirements ins 392, which apply to service under s 387. Section 389 does not make direct provision for service out of New Zealand; see the discussion of High Court Rules, rr 6.27 and 6.28 below (and note Metropolitan Glass & Glazing Ltd & Ors v The Ship "Ly dia Oldendorf" (2000) 14 PRNZ 671 ). See also the additional provisions as to service in s 392 of the 1993 Act. However, the words of s 389( I )(b ), and of s 341 (2) (which provides for removal from the overseas register of an overseas company which has ceased to carry on business in New Zealand) leave open an argument that the 1993 Act altered the law on this point in New Zealand, and that service in this manner ceases to be effective when the overseas company is removed from the overseas register.

16

(d) an overseas company which is carrying on business in New Zealand, but is not registered under Part 18 of the 1993 Act. 18 Overseas companies carrying on business in New Zealand are required to register, and commit an offence under the 1993 Act if they fail to do so. 19 Where an overseas company has failed to register as required, it can still be validly served in New Zealand in accordance with ss 389(1)(c), (d), (e). 20 In particular, where an overseas company has a place of business in New Zealand,2 1 service may be effected by delivery to an employee at that place (or at the principal place of business, ifthere is more than one): s 389(1)(c); (e) a corporation other than an overseas company (as defined in the Companies Act 1993) - for example, a corporation sole incorporated outside New Zealand - which has a place of business in New Zealand. High Court Rule 6.13(2) provides that proceedings may be served in New Zealand in accordance with r 6.11 (providing for personal service) by service on any person appearing to have control of the business of the corporation at its principal or only place of business in New Zealand; (f) a partnership, if any partner is present in New Zealand or the partnership has a place of business in New Zealand. High Court Rule 6.15 22 permits service on a partnership by personal service on any partner, or on any person appearing to have the control of the partnership's business at the principal place of business in New Zealand. Provided service is effected in this way, it does not matter that one or more partners are out of the jurisdiction at the time of service. 23 See generally Dicey at 348-350. (b)

Service under an agreement

Another important method of service provided for in the High Court Rules is service by a method agreed to in writing by a party. 24 There is no restriction on the methods of service that may be agreed to under this rule. The agreement may provide for service on the 18

19 20

21

22

23

24

"Overseas company" is defined in s 2 of the 1993 Act to mean a body corporate that is incorporated outside New Zealand. Section 332 of the 1993 Act sets out the meaning of "carrying on business" in this context. Companies Act 1993, s 334. Where an overseas company is not registered on the New Zealand Register of Overseas Companies; has no place of business in New Zealand and there is no agreement as to service, the only way it can be served in New Zealand is pursuant to directions of the Court. In Metropolitan Glass & Glazing Ltd & Ors v The Ship "Ly dia Oldendor.f' (2000) 14 PRNZ 671 , the Court purported to give directions for service in Japan in accordance with the procedural requirements ofr 6.12 ands 387. But this misunderstands the scope ofs 389(l)(d) which relates only to service in New Zealand. This may be a more demanding test than the common law test for whether a corporation is present in the jurisdiction. A corporation is treated as present in New Zealand at common law if there is some person in New Zealand carrying on the corporation's business (see Vogel v R & A Kohnstamm Ltd [1973] QB 133 ; BHP Petroleum Pty Ltd v Oil Basins Ltd [ 1985] VR 725 ; Guy v The Ferquson Syndicate Co. Ltd ( I 892) IO NZLR 405 (CA). Compare Marks & Co v Richards Ltd ( 1913) 32 NZLR IO 19). District Courts Rules 2009, r 3.44.15. Any High Court judgment obtained against the firm will be enforceable only against fim1 property in New Zealand, against the property of partners who appear in the proceedings and who admit they are partners or are adjudged to be partners, and against the property of partners who are properly served either within or outside New Zealand with the documents commencing the proceeding. However, the leave of the court may be obtained to issue execution against any other person as a member of the firm, and it appears that such an application could be made against a partner outside the jurisdiction who was not served with the original proceedings (see High Court Rules, r 17.7). Although the District Courts Rules make no specific provision for enforcement of a judgment against a firm against the property of individual partners, it appears that the same approach will be taken (see District Courts Rules 2009, r 1.13). High Court Rules, r 6.7 and District Courts Rules 2009, r 3.44.8.

17

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

defendant or on some other person, or by email to a given email address, or at a particular place in New Zealand or outside New Zealand. This rule enables parties to a contract to specify an address for service of any proceedings relating to the contract, and thus avoid some of the problems which may arise if a party is not present in New Zealand. Where a contract provides for service of proceedings on a person by service on an agent in New Zealand or at a place in New Zealand, it will be possible to establish jurisdiction by serving proceedings in the agreed manner even if the defendant is not present in New Zealand. Service under the agreement will not be treated as service out of the J. urisdiction , and High Court Rules 6.27 and 6.28 have no relevance (see Montgomery, Jones & Co v Liebenthal & Co [1898] 1 QB 487 (CA)). ~

The position is less clear where a contract provides for service on an agent, or at a place, outside New Zealand, or by email to a person who may be outside New Zealand when the email is sent. On one view, it is sufficient simply to serve the proceedings in accordance with the contract: by virtue of High Court Rule 6.7, 26 that service is then sufficient service on the defendant. It is certainly arguable, however, that that Rule does not of itself authorise service out of New Zealand: it simply deals with the consequences of service out of New Zealand other than on the defendant, if service out of New Zealand is permitted under the Rules. On this view, the proceedings could be served out of New Zealand pursuant to the agreement only if either High Court Rule 6.27 27 applied to permit service without leave, or leave was obtained under High Court Rule 6.28. 28 This view would be consistent with English practice: Civil Procedure Rule 6.11(2) expressly provides that a "claim form" served out of the jurisdiction in accordance with a contract is not deemed to have been duly served on the defendant unless leave to serve the claim form out of the jurisdiction has been granted under CPR 6.36, or the claim form could be served out of the jurisdiction without permission under CPR 6.32 or 6.33. The uncertainties in relation to High Court Rule 6. 729 should not pose a problem where a contract:

of the subject-matter of the proceeding and to defend the particular proceeding.3' This method of service is of limited practical significance, as only a small number of absent defendants have an attorney or agent with such full powers in New Zealand. There are also obvious practical difficulties for a plaintiff in ascertaining and proving the existence and authority of such an agent or attorney, particularly if there have not been previous dealings with that agent or attorney (see Paul Hastings Real Estate Ltd v Atkinson-Jones HC Wellington CP 59/86, 21 April 1986). It appears that this method of service has ceased to be available in respect of overseas companies (as opposed to natural persons, or other corporations) as a consequence, presumably unintended, of the enactment of s 389(2) of the 1993 Act. However, directions as to service in this manner could be sought from the court under s 389(l)(d). (d)

Service in Australia under the TTPA

When the TTP A comes into force it will make fundamental changes to the rules governing service of New Zealand proceedings in Australia, and vice versa. At present both countries apply the standard rules for service abroad to trans-Tasman proceedings. The TTP A provides a special regime for trans-Tasman litigation that does away with most of the special rules for cross-border proceedings, simplifying service, the basis on which a challenge to the forum can be made, and the enforcement of the resulting judgment. Once the TTPA is in force, a plaintiff in New Zealand proceedings will be able to serve those proceedings in Australia in the same way that the document is served in New Zealand. There is no need to obtain leave from the New Zealand court or tribunal, and there is no requirement for a connection between the proceeding and New Zealand. 32 Put simply, if the proceeding can be served in New Zealand, it can be served in Australia. High Court Rules 6.27 and 6.28, discussed below, will not apply to service of a party in Australia.

(a) provides for service at a place in New Zealand, but requires that a copy be sent by post or facsimile to an overseas address, or to a specified email address, provided that it is clear that delivery to the New Zealand address alone is sufficient service; or

The proceedings must be served in Australia in the same way that the proceedings are required or permitted to be served in New Zealand under the relevant court rules .

(b) provides for service to take place outside New Zealand, but includes a submission to New Zealand jurisdiction clause (see section 13.2, below): this will ensure that the proceedings can be served on the agent without leave of the court as High Court Rule ' 6.27(k) 30 will apply.

The TTP A also prescribes some additional process requirements for service in Australia which it is important to comply with carefully, to avoid challenges to the application of the TTP A regime further down the track. In particular, the documents served on the defendant in Australia must contain or be accompanied by the prescribed information for the defendant which includes general information about steps that the defendant must or may take in relation to the proceeding, and the consequences of the document being served on the defendant in Australia. 33 The information to be provided will be included in regulations made under the TTP A.

(c)

Service on an attorney or agent

It may be possible to serve proceedings in New Zealand where the defendant is not present in New Zealand, even if no agreement as to service has been entered into, if that defendant has an attorney or agent in New Zealand authorised to transact that person's affairs generally and to defend proceedings, or to transact that person's affairs in respect 25 26 27

28 29 30

Service of the proceedings in Australia will have the same effect as if the proceedings had been served in New Zealand. 34 The options for a defendant served with New Zealand proceedings in Australia under the TTPA are discussed in section 4.5 below.

District Courts Rules 2009, rr 3.44.21 and 3.44.22. District Courts Ru les 2009, r 3.44.8. District Courts Rules 2009, r 3.44.21. District Courts Rules 2009, r 3.44.22. District Courts Rules 2009, r 3.44.8. District Courts Rules 2009, r 3.44.21.

31

32 33 34

18

High Court Rules, r 6.16, District Courts Rules 2009, r 33 .44. I 6. See Environmental Solutions ltd v Jesco Dosiertechnik GMBH & Co KG ( 1999) 8 NZCLC 261 ,854 at 261,860-1 where this point was discussed. Trans-Tasman Proceed ings Act 20 I0, s 13. Trans-Tasman Proceedings Act 20 I0, s 15. Trans-Tasman Proceedings Act 20 I 0, s 14.

19

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

(e)

(iii)

was to be wholly or in part performed in New Zealand; or

(iv)

was by its terms or by implication to be governed by New Zealand law:

Personal service out of the jurisdiction (non-TTPA claims)

If it is not possible to serve proceedings in New Zealand, or if enforceability considerations require service on the defendant personally, New Zealand proceedings may be served on a defendant out of the jurisdiction: (a) without the leave of the court, if High Court Rule 6.27 35 applies; or (b) with the leave of the court, under High Court Rule 6.28.

(d) when the claim is for-

36

Express statutory authority is required to serve proceedings out of the jurisdiction (Eyre v Nationwide News Pty Ltd [1967] NZLR 851 at 852). Proceedings can only be served out of New Zealand under these provisions of the High Court Rules and the corresponding provisions of the District Courts Rules, and any other statutes which provide specifically for service of proceedings out of New Zealand. 37 As noted above, these rules currently apply to proceedings to be served on a defendant in Australia. But they will cease to apply to service in Australia once the TTP A comes into force. (f)

(c) when there has been a breach in New Zealand of any contract, wherever made:

(i)

a permanent injunction to compel or restrain the performance of any act in New Zealand; or

(ii)

interim relief in support of judicial or arbitral proceedings commenced or to be commenced outside New Zealand:

(e) when the subject matter of the proceeding is land or other property situated in New Zealand, or any act, deed, will, instrument, or thing affecting such land or property: (f) when the proceeding relates to the carrying out or discharge of the trusts of any written instrument of which the person to be served is a trustee and which ought to be carried out or discharged according to the law of New Zealand: (g) when any relief is sought against any person domiciled or ordinarily resident in New Zealand:

Service out of the jurisdiction without leave - High Court Rule 6.27

(h) when any person out of the jurisdiction is-

High Court Rule 6.27 sets out the circumstances in which proceedings can be served out of New Zealand without first seeking the leave of the Court to do so.

(i)

a necessary or proper party to proceedings properly brought against another defendant served or to be served (whether within New Zealand or outside New Zealand under any other provision of these rules), and there is a real issue between the plaintiff and that defendant that the court ought to try; or

(ii)

a defendant to a claim for contribution or indemnity in respect of a liability enforceable by proceedings in the court:

Rule 6.27 provides as follows: 6.27 When allowed without leave (1) This rule applies to a document that initiates a civil proceeding, or is a notice issued under subpart 4 of Part 4 (Third, fourth and subsequent parties), which under these rules is required to be served but cannot be served in New Zealand under these rules (an originating document).

(2) An originating document may be served out of New Zealand without leave in the following cases:

(i) when the proceeding is for the administration of the estate of any deceased person who at the time of his or her death was domiciled in New Zealand: (j) when the claim arises under an enactment and either-

(i)

any act or omission to which the claim relates was done or occurred in New Zealand; or

any act or omission in respect of which damage was sustained was done or occurred in New Zealand; or

(ii)

any loss or damage to which the claim relates was sustained in New Zealand; or

the damage was sustained in New Zealand:

(iii)

the enactment applies expressly or by implication to an act or omission that was done or occurred outside New Zealand in the circumstances alleged; or

(iv)

the enactment expressly confers jurisdiction on the court over persons outside New Zealand (in which case any requirements of the enactment relating to service must be complied with):

(a) when a claim is made in tort and(i) (ii)

(b) when a contract sought to be enforced or rescinded, dissolved, annulled, cancelled, otherwise affected or interpreted in any proceeding, or for the breach of which damages or other relief is demanded in the proceeding(i) (ii)

35 36 37

was made or entered into in New Zealand; or was made by or through an agent trading or residing within New Zealand; or

District Courts Rules 2009, r 3.44.21. District Courts Rules 2009, r 3.44.22. Despite some apparent misconceptions to the contrary, s 389 of the Companies Act 1993 does not authorise service out of New Zealand (Environmental Solutions Ltd v Jesco Dosiertechnik GMBH & Co KG (1999) 8 NZCLC 261,854; Metropolitan Glass & Glazing Ltd & Ors v The Ship "Lydia Oldendorf" (2000) 14 PRNZ 671; Sensation Yachts_Ltd v Det Norske Veritas PTE Ltd HC Auckland CJV-2009-404-1767, 29 May 2009). For a discussion of the authonty of the Employment Court and Employment Tribunal to authorise service out of New Zealand, see Ching v PT Duffill Watts Indonesia EmpC Wellington WC55/00, 22 November 2000.

20

(k) when the person to be served has submitted to the jurisdiction of the court (I) when a claim is made for restitution or for the remedy of constructive trust and the defendant's alleged liability arises out of acts committed within the jurisdiction:

(m) when it is sought to enforce any judgment or arbitral award.

As the Court Offshore Pty grounds for amendments

of Appeal recently observed in Wing Hung Printing Company Ltd v Saito Ltd [2011] 1 NZLR 754 at [22], r 6.27 has considerably expanded the service without leave that were set out in the former r 219. These were adopted following a review undertaken by a cross-border sub21

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

NZLS CLE Seminar • Private International Law

committee of the High Court Rules Revision Committee. Particular regard was paid both to problems encountered by the New Zealand courts in the interpretation and application of the former rules on service of process abroad, and to the recent amendments to such rules in New South Wales and in England.

other matters that the plaintiff will need to establish in the event of a protest to jurisdiction, under r 6.29: (a) whether there is a serious issue to be tried on the merits of the claim; (b) whether New Zealand is the appropriate forum for the trial of the claim;

Significant changes include: (i)

r 6.27(2)(a) expressly provides for the limit to tort claims that case law had established in relation to the former r 219(a);

(ii)

r 6.27(2)(d)(ii) now provides for service abroad without leave of a claim for interim relief in support of foreign judicial or arbitral proceedings. This new limb reflects the Court's new power to grant interim relief in support of foreign judicial or arbitral proceedings under r 7.81;

(iii)

r 6.27(h)(i) expressly sets out a requirement that there is a real issue to be tried between the plaintiff and the defendant. This restriction is intended to prevent the use of the "necessary or proper party" limb as a device for serving a defendant abroad without leave, by bringing contrived or hopeless proceedings against a defendant in New Zealand and joining the foreign defendant in those proceedings;

(iv)

r 6.27(h)(ii) provides for service abroad of a claim for contribution or indemnity in respect of a liability enforceable by proceedings in the Court. The rationale is that if the Court is hearing the substantive claim, it will often make sense for it to hear any consequential claim for contribution or indemnity;

(v)

(c) whether there are any other relevant circumstances that support an assumption of jurisdiction (or that point the other way). If any cause of action in the proceeding does not fall within r 6.27, leave to serve the proceedings abroad should be sought under r 6.28. (g)

Proceedings may be served out of New Zealand in circumstances where r 6.27 does not apply if leave to do so is first obtained from the Court under r 6.28. Leave to serve proceedings abroad is required under r 6.28 if any cause of action in the claim does not fall within r 6.27. Rule 6.28 provides: 6.28 When allowed with leave (1) In any proceeding when service is not allowed under rule 6.27, an originating document may be served out of New Zealand with the leave of the court.

r 6.27(j) provides for service abroad of a claim under New Zealand legislation in an expanded range of circumstances. This limb will substantially simplify service abroad of proceedings under the Fair Trading Act 1986 and other consumer protection and regulatory statutes;

(vi)

r 6.27(2)(1) is a new limb that provides for service abroad where a claim is made for restitution or for the remedy of a constructive trust, and the defendant's alleged liability arises out of acts committed within New Zealand; 38

(vii)

r 6.27(m) is a new limb that provides for service abroad of a claim to enforce any judgment or arbitral award. 39

Service out of the jurisdiction with leave - High Court Rule 6.28

(2) An application for leave under this rule must be made on notice to every party other than the party intended to be served. (3) A sealed copy of every order made under this rule must be served with the document to which it relates. (4) An application for leave under this rule must be supported by an affidavit stating any facts or matters related to the desirability of the court assuming jurisdiction under rule 6.29, including the place or country in which the person to be served is or possibly may be found, and whether or not the person to be served is a New Zealand citizen. (5) The court may grant an application for leave if the applicant establishes that-

For a detailed discussion of each of the limbs ofr 6.27, see the commentary to the rule in 40 McGechan on Procedure. Relevant New Zealand decisions are listed in Appendix 1, however care should be taken in consulting decisions on these rules prior to 2009 in view of the substantial changes not only in the detail but also in the overall approach effected by the 2008 reforms. It is also worthwhile consulting Dicey 362 - 396 for the construction of the (often similar) English rules and Nygh 40- 62 for the Australian authorities. In the event of a protest to jurisdiction, the plaintiff who serves proceedings abroad in reliance on r 6.27 will need to show that there is a good arguable case that one or more limbs of r 6.27 applies to each cause of action in the proceedings (r 6.29(1)(a)(i)). Before relying on r 6.27, a lawyer advising a party who wishes to serve proceedings abroad should consider whether it will be possible to establish this, and should also consider the

(a) the claim has a real and substantial connection with New Zealand; and (b) there is a serious issue to be tried on the merits; and (c) New Zealand is the appropriate forum for the trial; and (d) any other relevant circumstances support an assumption of jurisdiction.

As the Court of Appeal observed in Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, r 6.28 is broadly similar to the former r 220 with the important exception that r 6.28(5) now sets out specifically the matters which an applicant must establish before the court 41 will grant an application for leave to serve out of the jurisdiction. The applicant must satisfy the Court that: (a) the claim has a real and substantial connection with New Zealand; (b) there is a real issue to be tried on the merits of the claim;

38

39 40

A gap identified in Metal/ und Rohstoff AG v. Donaldson Lufkin & Jenrette Inc [1990] I QB 391 (CA); and see further Campbell McLachlan, "Restitution" in Campbell McLachlan and Peter Nygh (eds), Transnational Tort Litigation: Jurisdictional Principles (Oxford UP, 1996), Ch 13. A gap identified in Perry v. Zissis [1977] I Lloyd's Rep. 607. RA McGechan and others McGechan on Procedure (Thomson Reuters, Wellington, 1995)

22

(c) New Zealand is the appropriate forum for a trial of the claim; and

41

Wing Hung Printing Company v Saito Offshore Pty Ltd [2011] I NZLR 754

23

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

(d) other relevant circumstances support an assumption of jurisdiction by the New Zealand Court.

place and the evidence is likely to be relatively limited: Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [37].

Each of these requirements is discussed briefly below. Taken together, they reflect the same inquiry that was required by the former rules, and by the cases on the forum conveniens principle discussed in more detail below.

New Zealand is the appropriate forum for the trial

The claim has a real and substantial connection with New Zealand The former rule did not refer to the nature of the link between the claim and New Zealand, but this has always been a factor taken into account by the courts (Kuwait Asia Bank v National Mutual Life Nominees Ltd (No 2) [1989] 2 NZLR 50 (CA)). The main impact of the new rule is that it is now clear that there must be a real and substantial connection between the claim and New Zealand before the court can grant leave: previously, this was just one factor that went into the overall mix. A claim may have a real and substantial connection with New Zealand because the events in issue occurred here, or because the defendant has a significant connection with New Zealand, or because a claim is made in relation to assets that are situated here. The connections with New Zealand listed in r 6.27 provide helpful illustrations of sufficient connections with New Zealand. But as the Court of Appeal confirmed in Wing Hung Printing Company v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [48] the party seeking leave does not need to bring the claim within r 6.27, as an application under r 6.28 presupposes that service overseas could not be effected without leave under r 6.27. There is a serious issue to be tried on the merits The Court must be satisfied that there is a serious issue to be tried on the merits. This requirement has two limbs: there must be a serious legal issue to be tried, and there must be a sufficiently strong factual basis to support the legal right asserted by the party seeking leave: Wing Hung Printing Company v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [37]; Harris v Commerce Commission (2009) 12 TCLR 379 (CA). 42 Before the criteria for leave were restated in r 6.29, the "serious issue to be tried" test was applied by the English courts, but the New Zealand courts expressed the relevant threshold as a requirement that there be a "good arguable case" on the merits. 43 Some New Zealand cases suggested there was no material difference between these thresholds. The new rule is clearly intended to reflect the distinction between the two standards adopted by the House of Lords in Seaconsar Far East Ltd v Bank Markazi [1994] 1 AC 438 (HL): Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [40]. The new rule makes it clear that the relevant threshold is the (lower) "serious issue to be tried" standard. It is if anything even clearer under this standard that the Court will not carry out an in-depth inquiry into the merits or strength of the claimant's case. In determining whether there is a serious issue to be tried, the Court will not decide credibility issues where there are conflicting affidavits, other than in exceptional cases where one version can be demonstrated by objective evidence to be untenable. In most cases where a protest to jurisdiction is being determined, discovery will not have taken 42

43

Harris v Commerce Commission was reversed on other grounds in Poynter v Commerce Commission [20 I OJ 3 NZLR 300 (SC). But there was no appeal from the Court of Appeal finding on the "merits of the claim" limb of the test for service abroad. Stone v Newman (2002) 16 PRNZ 77 (CA) at [22]-[26], Bomac Laboratories v F Hoffman-La Roche Ltd (2002) 7 NZBLC I 03,627 at [28]; Harris v Commerce Commission (2009) 12 TCLR 379 (CA) at [60].

24

Where both a New Zealand court and the courts of another country have jurisdiction to hear and determine a proceeding, it is necessary to determine in which forum the dispute can be most suitably tried in the interests of all parties and for the ends of justice. This identification of the most appropriate forum is the question of "forum conveniens", or conversely "forum non conveniens". 44 In considering whether New Zealand is the appropriate forum for the trial, the Court will be guided by existing authority including the matters canvassed by the House of Lords in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460. The new Rules clearly place the onus of establishing that New Zealand is forum conveniens on the party effecting service: Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [43]. (This is the same as the position under the former rules where leave is sought to serve proceedings abroad, but represents an important change where service has been effected without leave under r 6.27.) The relevant principles and the extensive case-law on forum conveniens are discussed in section 4.6 below. Any other relevant circumstances support an assumption ofjurisdiction. Rule 6.28(5)(d) underscores that the assumption of jurisdiction ultimately involves an evaluation of a range of considerations which are very much fact dependent: Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd [2011] 1 NZLR 754 (CA) at [47]. Relationship between r 6.27 and r 6.28 Although rr 6.27 and 6.28 have been viewed as mutually exclusive,45 where there is doubt about the application of r 6.27 it seems appropriate to apply under rr 7.9 46 and 6.28 for directions on whether to serve under r 6.27, or alternatively for leave under r 6.28. The new Rules also (reflecting earlier case-law) expressly permit a party who has incorrectly served proceedings without leave under r 6.27 to avoid the dismissal of their claim by establishing that had the party applied for leave under r 6.28, leave would have been granted, and it is in the interests of justice that the failure to apply for leave should be excused (r 6.29(1)(b) - r 6.29 is discussed in more detail below). Rule 6.28 only governs the service outside New Zealand of the originating documents in a proceeding. If the originating documents are served either without leave under r 6.27, or with leave under r 6.28, and the defendant files papers with an address for service in New Zealand under r 5.44, 47 which applies to the first document served even if it is an objection to jurisdiction, all subsequent documents can be served at the address for service (High Court Rule 6.1). If no address for service is filed, there is no obligation to

44

45

46 47

See Spiliada Maritime Corp v Cansulex Ltd [ 1987] AC 460. See Alcatel-Lucent NZ Ltd v Juniper Networks Australia Pty Ltd HC Wellington CIV-2009-485-2289, I December 2009 at [41]; McGechan on Procedure (online ed) at HR6 .27.06 District Courts Rules 2009, r 3.50.1 . District Courts Rule 3.37.9.

25

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

~erve any further documents or notices on that defendant (High Court Rule 6.20). 48 If the Judgment may need to be enforced outside New Zealand, however, it is prudent to keep the defendant informed of all steps being taken, and to serve any further documents personally, to avoid complaints of breach of natural justice. No leave is required to do this. An application for leave under r 6.28 will normally be made without notice (still often 49 d~scribed as _ex ~art~). The originating documents should be filed in the Court, together with an application m the form required for applications without notice , and an affidavit . m support (r 6.28(4)). Rule 6.28(4) requires the affidavit to set out any facts or matters related to the desirability of the New Zealand court assuming jurisdiction under r 6.29 (discussed in section 4.3 below). These matters will include the place or country in which the person is to be served or may be found, and whether or not the person to be served is a New Zealand citizen. The supporting affidavit should: (a) outline the background to the claim; (b) state where the defendant is to be served, and whether any difficulties are anticipated in locating and serving the defendant; (c) explain why the claim has a real and substantial connection with New Zealand and why it is appropriate for the claim against the defendant to be heard in New Zealand·, (d) explain w~y it is not appropriate for the claim to be heard in the country where the defendant 1s to be served and/or is resident·, (e) address any of the criteria relevant to forum conveniens which are significant in relation to the claim (see section 4.5 below); (f) make full_ discl~sure of all facts relevant to the appropriateness of a hearing in New Zealand, mcludmg any defences that the intended defendant may have. The normal obligation to be candid and make full disclosure on an application made without notice applies to an application under r 6.28 (Bramwell v The Pacific Lumber Co Ltd (1986) 1 PRNZ 307 at 309). (h)

Substituted service

Although the position is not free from doubt under the current High Court Rules the better view is that an application may be made under r 6.8 for an order for substi~ted service where a defendant is out of New Zealand. 50 The court must be satisfied that reasonab~e efforts have been made to effect service by other methods permitted by the Rules: High Court Rule 6.8 cannot be used as an alternative torr 6.27 and 6.28, simply on the grounds that the defendant is not in New Zealand (Metropolitan Glass & Glazing Ltd & Ors v The Ship "Lydia Oldendorf" & Anor (2000) 14 PRNZ 671). If r 6.27 applies, attempt~ m~st normally hav~ been made to serve the defendant overseas. If r 6.28 applies, an apphcat10n under r 6.8 will not normally be appropriate unless leave has been obtained under Rule 6.28, and reasonable attempts have been made to effect service (Myerson v Mart~n [1979] 3 All ER 667 (CA); Laurie v Carroll (1958) 98 CLR 310; Mandia! Trading Pty Ltd v Interocean Marine Transport Inc (1985) 60 ALJR 277; Australian 48 49

50

District Courts Rule 3.44.20.

Securities and Investment Commission v Sweeney (No 2) [2001] NSWSC 477; Sweeney v Howard [2007] NSWSC 262). One exception to the requirement that efforts be made to effect personal service is where, despite reasonable inquiries, no trace of the defendant's whereabouts can be discovered. Such cases are likely to be rare. Another exception appears to be where the plaintiff can show that the defendant left New Zealand in order to evade service (Re Urquhart (1890) 24 QBD 723, but see Laurie v Carroll (1958) 98 CLR 310). The methods of service ordered by the court may include service on another person in New Zealand or overseas, posting the documents to an address in New Zealand or overseas, or advertisement in a newspaper published in the area where the defendant is resident. The courts have granted orders for substituted service to be effected by email (with a read receipt) (Re Franck ex parte Asteron Life Ltd (2009) 19 PRNZ 446 (HC), where Clifford J noted that the email address had been used to contact the defendant in the recent past and therefore service via email would be likely to bring the document to the defendant's attention) and by means of social networking sites such as Facebook (Axe Market Gardens Ltd v Axe HC Wellington CIV 2008-485-2676, 16 March 2009). The primary consideration in determining the appropriate method of service is how the matter can best be brought to the attention of the person in question: Re McLaughlin [1905] AC 343, 347 (PC).) (i)

Where proceedings are to be served out of the jurisdiction under r 6.27 or 6.28, the notice 51 of proceeding must be modified in accordance with High Court Rules 6.31 and 6.35: (a) the time for filing a statement of defence or objection to jurisdiction is extended to 30 working days from the date of service; (b) an additional notice must be added to the notice of proceeding, in form G6. The notice must specify the scope of the jurisdiction of the court in respect of claims against persons who are not resident in New Zealand; the grounds alleged by the plaintiff in relying on that jurisdiction; and the defendant's right to enter an appearance and objection to the jurisdiction of the court under rule 5.49; (c) if the proceeding is served without leave under r 6.27, the notice must specify the limbs of r 6.27 which the plaintiff considers to be applicable, and the grounds on which the plaintiff considers that they apply. 52 If the proceeding is served with leave under r 6.28, the notice should specify that the court may exercise jurisdiction where it considers that New Zealand is the most appropriate country in which the matters in dispute should be determined, and grants leave to serve the proceedings out of New Zealand. The grounds on which leave was sought and granted should then be specified (cf paras 4 and 5 of form G6, which are relevant only where service is to be effected under r 6.27).

If there are defendants to be served in New Zealand in the same proceeding, the normal notice of proceeding should be served on each of them. If more than one defendant is to be served out of New Zealand, it may be necessary to prepare more than one modified

51

Although see Reding v GE Capital Australia ltd HC Auckland CP 232/98, 7 December 1998, where an inter partes argument took place following the plaintiffs failure to serve proper notice of proceeding. See McGechan [HR6.8.05].

26

Notice of proceeding for service under High Court Rules 6.27 or 6.28

52

District Courts Rules 2009, rr 3.44.25 and 3.44.29. Provided a defendant is not prejudiced, the Court may allow a plaintiff to rely on additional ground not specified in a notice given under these rules (McConnell Dowell Constructors ltd v Lloyd's Syndicate 396 [1988] 2 NZLR 257, also reported as McConnell Dowell Constructors ltd v Gardner-Roberts ( 1987) I PRNZ 567).

27

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

NZLS CLE Seminar• Private International Law

notice of proceeding, if different grounds for service out of New Zealand are relied upon in relation to each of them. (j)

Serving the documents

If r 6.27 applies, or if leave is obtained under r 6.28, the next step is to serve the documents on the intended defendant. Rule 6.32(1)5 3 provides that the originating document must be served by a method:

(a) specified in rule 6.1 (which sets out the methods of service on a natural person in New Zealand); or (b) permitted by the law of the country in which it is to be served; or (c) provided for in rules 6.33 (service through official channels) and 6.34 (service m convention countries). If a convention relating to service of process is in force between New Zealand and the country where service is to be effected, service must be effected in accordance with a method provided for, or permitted by, that convention: r 6.32(3).

Rule 6.32(4) provides that service outside New Zealand is invalid "if effected contrary to the law of the country where service is effected". The better view is that this is not a requirement that local methods of service must always be used, rendering r 6.32(1)(a) redundant. Rather, the issue is whether service in the relevant manner would be contrary to local law ie prohibited by local law. For example there are many countries where service of foreign proceedings by unofficial means, such as personal service by an agent of the plaintiff or service by mail, is prohibited. Rule 6.32(4) provides that service in a manner that contravenes the law of the country of service is not valid.

will not be sufficient unless the process server is qualified to give expert evidence on this aspect of foreign law. There will be no problem if the process server is legally qualified in the relevant jurisdiction. Otherwise, an affidavit from a practising lawyer in that jurisdiction is desirable. Whoever the deponent is, he or she should exhibit to the affidavit the relevant provisions of the domestic law governing service, if it is codified. A bald statement that the law was complied with, without any evidence of that law, is likely to be rejected. Service is normally arranged privately, through New Zealand service agents or through lawyers in the jurisdiction in which the proceedings are to be served. Rule 6.34 55 makes provision for official service of documents in countries with which New Zealand has entered into a convention relating to service of documents (for a list of such countries, see the commentary tor 6.34 in McGechan on Procedure). This procedure is more complex and may be more costly than making private arrangements. It is complementary to other procedures for serving documents in convention countries, unless a convention or the law of the convention country provides otherwise (High Court Rule 6.34(1)(b)). New Zealand lawyers should be aware that in some non-convention countries, such as Japan, although New Zealand law contains no restriction on service through unofficial channels, such service is a breach of domestic law with the result that unofficial service is not effective under r 6.32(4), and even if a judgment were to be obtained in New Zealand it would not be enforced in that country. It may be possible to arrange service through diplomatic channels in such countries despite the absence of a convention, as contemplated by r 6.33: this varies from country to country. (k)

Although r 6.32(4) does not require service to be effected in a manner that is provided for in the law of the place of service, it is prudent to ensure that service is consistent with local requirements, for a number of reasons. First, the New Zealand requirements for service on companies set out in s 389 of the Companies Act 1993 cannot be applied literally as that provision refers only to service in New Zealand and to persons and places in New Zealand. The better view is that it can be applied by analogy with such modifications as are necessary in this context, but it is probably safer to serve an overseas company outside New Zealand in a manner that would be accepted as valid service in the place of service. Second, the documents should be served in accordance with the law of the place of service so that, if no defence is filed, a default judgment can be obtained (see section 4.2(1) below). The importance of careful instructions to the foreign process server is clear! As a matter of course, an affidavit should be obtained from the process server. 54 The circumstances of service should be set out in some detail. In addition, if an application for entry of judgment by default is to be made, there should be evidence that the service was not contrary to the law of the country where service was effected, and that the method of service was valid and effective under the law of the place of service. While the court may accept a statement to this effect in the affidavit of the process server, strictly speaking this 53 54

District Court Rules 2009, r 3.44.26. Note the requirements of the High Court and District Rules in relation to affidavits taken in foreign countries (High Court Rules, IT 9.86-9.88; District Court Rules 2009, IT 3.70.11-3.70.13, discussed further in section 7 below).

28

The defendant's response

Once the papers have been served on the defendant, the future course of the proceedings depends on the defendant's response. If the defendant does nothing, and the time for filing a defence elapses, the plaintiff can apply for judgment by default (r 15.14,56 discussed below). If the defendant files a defence, and does not challenge the New Zealand court's jurisdiction or apply for a stay on grounds of forum non conveniens, the proceedings will continue in the same way as a normal domestic proceeding. However, the defendant may: (a) object to the jurisdiction of the New Zealand court; or (b) apply for a stay of proceedings in New Zealand on the grounds of forum non convemens. These responses, and how a plaintiff should deal with them, are considered in detail in section 4.3 below. (I)

Entry of judgment by default

If a defendant served out of New Zealand files neither an appearance under High Court Rule 5.49 57 nor a statement of defence, the plaintiff may apply for judgment by default 55 56 57

District Courts Rules 2009, r 3.44.28. District Courts Rules 2009, r 3.44.30. District Courts Rules 2009, rr 2.3.6, 2.12.6 and 3.38.1.

29

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

under High Court Rules 15.7 to 15.9, or proceed to judgment under High Court Rules 15.10 or 15.12. In addition to the affidavit of service required by High affidavit required under High Court Rule 15 .4(b), 59 r requirements that must be satisfied before judgment proceedings were served abroad under High Court Rule provides:

Court Rule 15.4(a), 58 and any 15 .14 imposes a number of is entered by default where 6.27. High Court Rule 15.1460

15.14 Overseas service cases (1) When a document has been served on a party outside New Zealand under rule 6.27 and that person has not appeared, judgment by default against that party must not be sealed without the leave of the court. (2) Leave must not be granted unless the court is satisfied-

including agreements to determine disputes in another jurisdiction or by arbitration, or possible defences to the substantive claim. (m)

Proceedings in which the plaintiff seeks summary judgment may be served by any of the methods discussed in sections 4.2(a) to (f) above. Initial uncertainty about the application of High Court Rule 6.27 where the plaintiff seeks summary judgment was resolved by Jones v Chatfield HC Auckland CP 580/87, 1 April 1987; and Mitsubishi Motors New Zealand Ltd v Tatton HC Masterton CP 12/88, 26 July 1988; and confirmed in Hodder Moa Beckett Publishers Ltd v Weinbaum (1997) 11 PRNZ 373. This position is recognised by High Court Rule 12.5: 12.5 Service out of New Zealand

(a) that the party applying for leave was entitled to effect service without leave under rule 6.27; and

A plaintiff who makes an application under rule 12.2 or 12.3 must serve the documents specified in rule 12.4(4) on a defendant who is overseas,-

(b) that there is no reason to believe that the service was effected, or may have been effected, contrary to the law of the country concerned relating to the method of serving documents in domestic actions on persons in that country; and

(a) if the defendant is served in the Commonwealth of Australia, not less than 15 working days before the date for hearing the application: (b) if the defendant is served elsewhere, not less than 25 working days before the date for hearing the application.

(c) that the service was effected in sufficient time to enable that party to appear.

Application to seal judgment by default will normally be made without notice to the defendant. But evidence that the application has been served on the defendant, or otherwise brought to his or her attention, may assist in persuading the court to seal judgment and may be significant if the plaintiff contemplates enforcement of the judgment outside New Zealand. The application will need to be supported by evidence of service (see section 4.2(i) above), and evidence that the claim fell within r 6.27. Additional evidence that the claim came to the notice of the foreign defendant - for example, correspondence from the defendant or solicitors acting for the defendant - is also desirable. The court appears to retain a residual discretion to decline leave to enter judgment by default, even if the conditions in High Court Rule 15.14 are satisfied. Some guidance as to the basis on which that discretion may be exercised can be derived from the fact that High Court Rule 15 .14 applies only where proceedings were served overseas under High Court Rule 6.27, and not where proceedings were served overseas with leave under High Court Rule 6.28. On an application under High Court Rule 6.28 the court will already have considered the appropriateness of subjecting the defendant to New Zealand jurisdiction, and the rules dispense with any requirement for leave to file judgment by default. In a case which falls within the letter of High Court Rule 6.27, but where it is clearly inappropriate for the defendant to be subjected to New Zealand jurisdiction, it is suggested that the court should decline to enter judgment by default (see Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [1990] 3 NZLR 513; [1991] 1 AC 187; [1990] 3 All ER 404 (PC)). It follows from the existence of this broader discretion, and the normal rules relating to applications made without notice, that the plaintiff should disclose to the court any factor going to the appropriateness of New Zealand jurisdiction, 58

59 60

District Courts Rules 2009, r 12.33. District Courts Rules 2009, r 12.33. District Courts Rules 2009, r 12.36.

The overseas defendant is subject to the usual timetable for filing its notice of opposition and evidence. However, if it subsequently proves difficult to serve the defendant, a request may be made under r 12.8 for enlargement oftime. If a defendant to summary judgment proceedings served out of New Zealand appears in the proceedings (other than to challenge jurisdiction), or has agreed to submit to New Zealand jurisdiction, the enforceability of a judgment obtained by the plaintiff will not be impaired by use of the summary procedure, at least in most other common law jurisdictions. On the other hand, if the defendant does not appear and has not submitted to New Zealand jurisdiction, the plaintiff is in no better position having obtained a summary judgment than a judgment by default.

Any dispute about jurisdiction following an appearance entered under High Court Rule 5.49 61 must be resolved before a summary judgment application proceeds to a substantive hearing: Advanced Cardiovascular Systems Inc v Universal Specialties Ltd [1997] 1 NZLR 186; (1996) 9 PRNZ 632 (CA); see also Rimini Ltd t/a Cleantastic International v Manning Management and Marketing Pty Ltd t/a Cleantastic International NSW [2003] 3 NZLR 22 at [39]. Where a challenge to jurisdiction is unsuccessful, timetabling directions under r 5.49(9) will be made. A defendant served with summary judgment proceedings in New Zealand may apply to the court to dismiss the proceeding on the ground that the court has no jurisdiction to hear and determine the proceeding. To the extent that the application relates to service effected outside of New Zealand under r 6.27 or 6.28, the court will determine the application in accordance with r 6.29 (see section 4.3(b) below). An application for a dismissal of the proceeding is also likely to be dealt with prior to consideration of the application for summary judgment, but might in some cases be dealt with at the same time.

61

30

Summary judgment applications

District Courts Rules 2009, rr 2.3.6, 2.12.6, 3.38.1.

31

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

NZLS CLE Seminar• Private International Law

As an alternative to dismissal under r 5.49(3), a defendant may apply for a stay of the proceedings on the grounds of forum non conveniens (see section [4.3(c)] below). As noted in McGechan on Procedure at 5.49.07, if an objection is made on the basis of forum non conveniens considerations, a stay may be more appropriate. The factors to be taken into account in considering whether New Zealand is forum non conveniens will be affected by the summary judgment context, in particular in relation to witness convenience, ability to obtain legal advice, prepare affidavits and brief counsel and whether the alternative forum also offers a procedure as speedy and inexpensive as New Zealand's summary judgment procedure (see Bank of New Zealand v Kemp (1991) 4 PRNZ 444; and Scales Trading Ltd v Far Eastern Manufacturing & Commerce Corporation HC Christchurch CP 41/97, 17 June 1997. In Kang v Hyundai Electronics Industries Co Ltd (1995) 8 PRNZ 628 (CA), the Court of Appeal held that New Zealand was an appropriate forum to determine a summary judgment application, in response to a forum non conveniens argument which the defendant sought to make after filing a protest to jurisdiction. The Court considered that if the summary judgment application was unsuccessful, the question of a stay on grounds of forum non conveniens could be revisited. The result in Kang was appropriate, as the defendants had been served in New Zealand. Their protest to jurisdiction was completely misconceived, and should have been set aside on the simple ground that service took place in New Zealand. An application for a stay on grounds of forum non conveniens could have been made (see section 4.4 below); in relation to this application, it would be appropriate to decline a (discretionary) stay pending resolution of the summary judgment application where New Zealand was an appropriate forum to determine that application, though not necessarily for a full trial. However, it is strongly submitted that where a defendant is served out of New Zealand, it is irrelevant that summary judgment has been sought. The plaintiff must show that New Zealand is an appropriate forum for determination of the entire proceeding, including any trial. Otherwise the defendant would be placed in the impossible position of having to submit to New Zealand jurisdiction in order to oppose summary judgment, and losing altogether the ability to object to jurisdiction (as opposed to seeking a discretionary stay at a later stage).

Bank of New Zealand v Kemp (1991) 4 PRNZ 444 appears to have adopted an inappropriate approach to the significance of the summary judgment application, as a consequence of a more fundamental misunderstanding of the distinction between the law applicable to defendants served out of New Zealand under rr 6.28 or 6.27, and the law which applies where a defendant is served in New Zealand as of right (see section 4.4 below). It should not be followed on this point. (n)

Disputes Tribunal proceedings

Neither the Disputes Tribunals Act 1988 nor the Disputes Tribunals Rules 1989 make express provision for service of Disputes Tribunals claims out of New Zealand. Both the common law rule that proceedings cannot be served out of the jurisdiction without express authority to do so (Eyre v Nationwide News Pty Ltd [1967] NZLR 851 at 852), and the policy underlying the Disputes Tribunals legislation of personal appearance by the parties to secure the expeditious and inexpensive resolution of disputes, support the conclusion that a Disputes Tribunal claim cannot be brought against a person not present in New Zealand. A claim in a Disputes Tribunal can, however, be served on an overseas

corporation with a place of business in New Zealand (Companies Act 1993, s 389 and and Disputes Tribunals Rules 1989, r 1 l(b)). (o)

There is a limited class of persons who cannot normally be sued in New Zealand. Proceedings cannot always be brought, or execution issued, against: (a) a foreign state; or (b) a person entitled to immunity under the Diplomatic Privileges and Immunities Act 1968 or the Consular Privileges and Immunities Act 1971; or (c) international organisations to which Part II of the 1968 Act applies, and persons connected with those organisation. Sovereign immunity is a common law principle, which prevents proceedings being brought or execution issuing against a foreign state, subject to certain exceptions. The doctrine has been codified in the United Kingdom, and in Australia, but not in New Zealand. 62 For a helpful summary of the principle as it applies in New Zealand see Fang v Jiang [2007] NZAR 420 at [15] - [22]. New Zealand courts have applied the restrictive theory of immunity, under which foreign states enjoy immunity only for acts of a governmental nature, and not for acts of a commercial nature (Marine Steel Ltd v Government of the Marshall Islands [1981] 2 NZLR 1, Reef Shipping Co Ltd v The Ship "Fua Kavenga" [1987] 1 NZLR 550; Governor of Pitcairn and Associated Islands v Sutton [1995] 1 NZLR 426 (CA)). The leading cases are Playa Larga (Owners of cargo lately laden on board) v I Congreso def Partido (Owners) I Congreso def Partido [1983] 1 AC 244 (HL), especially the speech of Lord Wilberforce; and Kuwait Airways Corp v Iraqi Airways Co [1995] 1 WLR 1147; [1995] 3 All ER 694 (HL), especially the speech of Lord Goff. The operation of the restrictive theory is well illustrated by Governor of Pitcairn and Associated Islands v Sutton [1995] 1 NZLR 426 (CA). There, the plaintiff was a New Zealander employed as a clerk in the Auckland office of the Governor of Pitcairn Island (also the British High Commissioner in New Zealand, hence the office was within the British Consulate-General in Auckland). The plaintiff was dismissed and brought a personal grievance under the Employment Contracts Act 1991 . The Governor invoked sovereign immunity in respect of his employment of the plaintiff, and this was upheld by the Court of Appeal. The Court reasoned that the plaintiffs position was central to the administrative process in governing Pitcairn, a process exclusively within the sovereign function of the British state, and the Court would not adjudicate on, as Cooke P put it, "how well or badly the British administrative machine dealt with her". That the distinction between acts of a commercial nature and acts of a governmental nature is not always able to be so clearly drawn is illustrated by the Court of Appeal's subsequent decision in Controller and Auditor-General v Sir Ronald Davison [1996] 2 NZLR 278. 63 In that case there was a marked difference of opinion between the judges on 62

63

32

Persons who cannot be sued in New Zealand

New Zealand has not yet signed or ratified the United Nations Convention on Jurisdictional Immunities of States and their Property (signed New York, 2 December 2004). The Convention has been signed by the United Kingdom and a number of New Zealand's other major trading partners, but has not yet entered into force. Aspects of the judgment went on appeal to the Privy Council in Brannigan v Sir Ronald Davison [ 1997] I NZLR I40, [ 1997] AC 238, but the issue of sovereign immunity did not arise on the appeal.

33

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

the character of the acts of the government of the Cook Islands in connection with the "Magnum" transactions that were the subject of the "Winebox" Royal Commission. Cooke P and Henry J held that, although the issuing of tax certificates was nominally a governmental act, the context revealed that the issue of the tax certificates in question formed part of a wider commercial scheme, and this excluded the doctrine of sovereign immunity. 64

Mann as an "English aberration", has been abolished by statute in England and in Australia, but may still be law in New Zealand. It would be open to the New Zealand courts to reject the rule, however, and it is strongly submitted that this is appropriate given the absurdity of the rule, and its abandonment in England (the country of its genesis) and in Australia (our nearest and most significant trading partner).

Richardson and McKay JJ, on the other hand, reasoned that: 65

A State may submit to New Zealand jurisdiction by bringing proceedings in a New Zealand court, or taking steps in proceedings other than to assert immunity or protect property from seizure (see Dicey at 285-286) .

. . . whatever the motivation and whatever the overall economic result, it [the issue of the tax certificates] involved the application of the tax legislation of the Cook Islands. The issue of a tax certificate for tax stated to have been paid was an integral feature . It was a public act of the state . ..

They concluded that the issuing of tax certificates was to be characterised as an exercise of governmental power. 66 Thomas J remarked on the absence of universally accepted criteria for characterising an act as sovereign or non-sovereign, the fiction that "the state ever steps down from its sovereign pedestal" which is involved in the classification and the scope for selecting the test to justify the determination, and joined with the President and Henry J in classifying the Cook Islands' government as "within the exception contemplated by the restricted theory". 67 The reasoning of Richardson and McKay JJ is, with respect, more consistent with established principles than that of the majority. 68

Sir Ronald Davison's case is also notable for the innovations of all the judges in using considerations of public policy to justify limitations on the doctrine of sovereign immunity. The President and Henry and Thomas JJ held that New Zealand's public policy interests required the exclusion of the doctrine. 69 Richardson and McKay JJ recognised a general exception to the doctrine in circumstances of "iniquity", ie "where the impugned activity, if established, breaches a fundamental principle of justice or some deep-rooted 70 tradition of the forum state", and "where the alleged conduct of the foreign state is directed in a real sense against the forum state ... ".7' An attempt to abuse New Zealand's tax laws was such a case. This supposed exception to the doctrine is very difficult to reconcile with the underlying principles or other authorities. There are some exceptions to the doctrine but they are (for good reason) far more narrowly circumscribed. 72 Sovereign immunity may be waived by the foreign state. The common law rule is that a prior contract to submit to jurisdiction is not sufficient: there must be a waiver given to the court itself, at the time it is asked to exercise jurisdiction. 73 This rule, described by 64 65 66

67 68

69 70

71

At 289, 309. At 301. At 301 , 307. At3ll-13. See Campbell McLachlan, "The Jurisdictional Limits of Disclosure Orders in Transnational Fraud Litigation" (1998) 47 TCLQ 3 for a helpful discussion of the Winebox litigation, including the Court of Appeal's analysis of sovereign immunity. At 287, 309, 313. At 305. At 306.

For other exceptions to the doctrine of sovereign immunity, see the cases cited in Dicey at 285-293 in relation to the position before enactment of the State Immunity Act 1978 (UK) (and see the 9th edition of Dicey at 138-144, 154-157). It is not clear whether, at common law, submission to jurisdiction entails submission to execution, or whether a separate submission is necessary. 74 This point has also been addressed by legislation in the United Kingdom and Australia, but remains unsettled in New Zealand.

The Diplomatic Privileges and Immunities Act 1968 gives effect to the Vienna Convention on Diplomatic Relations (1961 ), and the Consular Privileges and Immunities Act 1971 gives effect to the Vienna Convention on Consular Relations (1963). The immunities conferred by the Acts may be waived by the sending state. See Dicey at 294300 for a discussion of the corresponding English legislation. Part II of the 1968 Act enables the Governor-General to confer certain immunities on international organisations, and persons connected with them, by Order in Council. The provisions of Part II are similar to those of the International Organisations Act 1968 (UK), discussed in Dicey pp 300-304. Where a question arises as to whether a person is entitled to a privilege or immunity under the 1968 Act, s 22 provides that a certificate from the Minister is conclusive evidence of any relevant facts set out in the certificate. The Minister may also be willing to give a certificate in circumstances where s 22 does not apply, but a question as to recognition of a foreign state arises (but there are limitations on this practice see AttorneyGeneral for Fiji v Robert Jones House Ltd [1989] 2 NZLR 69). (p)

The importance of thinking about enforcement against foreign defendants

Before moving on to consider the position of the defendant in New Zealand proceedings served out of New Zealand, there is one very important consideration for plaintiffs which must be emphasised. Before beginning proceedings against a foreign defendant, thought should be given to how any judgment obtained will be enforced. If the defendant has assets in New Zealand of sufficient value to meet a judgment, there is no particular difficulty - although if there is a risk of these assets being dissipated or removed from New Zealand when the defendant is served with the proceedings, it may be appropriate to apply for a freezing order under Part 32, or a charging order before judgment (under r 17.41), before serving the defendant (see section 6 below).

72

73

See R v Bow Street Metropolitan Stipendiary Magistrate & Ors, ex parte Pinochet Ugarte (Amnesty International & Ors intervening) (No 3) [1999] 2 All ER 97 (HL). Dicey at 285 ,; A Co Ltd v Republic ofX [ 1990] 2 Lloyds Rep 520 criticised by Mann at (1991) I07 LQR 362).

34

74

Re Suarez [1917] 2 Ch 131 , Duff Development Co v Government of Kelantan [1923] I Ch 385 (CA) but see, on appeal, [1924] AC 797 at 810, 821 , 830.

35

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

NZLS CLE Seminar• Private International Law

If the defendant may not have sufficient assets in New Zealand, then it follows that the judgment may have to be enforced elsewhere. Not every New Zealand judgment will be enforced in any given jurisdiction, and the rules vary considerably from jurisdiction to jurisdiction. Before taking any steps, it is desirable to seek advice on enforcement in the jurisdiction where enforcement is likely to take place: there may be special conditions which must be satisfied before a New Zealand judgment will be enforced there. Particular difficulty will arise if judgment is obtained in New Zealand by default, and the defendant has not submitted to New Zealand jurisdiction. Problems may also be encountered where service is effected in a manner permitted by the High Court or District Court Rules, but not recognised as sufficient in the jurisdiction of enforcement: particular care is required when relying on substituted service, for example. It is prudent to check on the requirements of the intended place of enforcement for recognition of New Zealand ~udgments (as to notice to defendants, for example) before proceeding, rather than sealing Judgment first and then discovering that the judgment is unenforceable in the place where the defendant has all his or her assets.

4.3.

Acting for a foreign defendant upon whom New Zealand proceedings have been served outside New Zealand

Once the TTPA is in force, the issues that need to be considered where you are advising a foreign defendant served with New Zealand proceedings will depend very much on where the defendant has been served. If the proceedings have been served in Australia, then the options are much more limited - they are discussed in section 4.5 below. This section applies where a foreign defendant is served in Australia before the TTPA comes into force, and also where a foreign defendant is served in a country other than Australia. If a foreign defendant is served with New Zealand proceedings outside New Zealand, a number of courses of action are open to that defendant. Before a considered choice has been made between those courses of action, it is essential that no documents other than an objection to jurisdiction under r 5.49 should be filed in the New Zealand court. Filing any other document, and in particular a statement of defence, may amount to a submission to jurisdiction which is irrevocable and which has significant consequences.

The courses of action open to a foreign defendant served outside New Zealand are: (a) to do nothing; (b) to object to jurisdiction; (c) to object to New Zealand as the venue for the proceedings, on the grounds that New Zealand is forum non conveniens; (d) to defend the action in the normal way. These options are considered below, as are the responses open to the plaintiff. (a)

Option one - do nothing

The option of doing nothing is a high risk strategy. However, it is inexpensive and can be very successful. 36

If the defendant does nothing, the plaintiff will almost certainly obtain judgment in default of appearance. That judgment will be quite valid under New Zealand law, and may:

(a) be enforced against any property the defendant has in New Zealand. If the defendant has or is likely to have any significant assets in New Zealand, doing nothing is not a sensible option; 75 (b) be the basis of bankruptcy proceedings or liquidation proceedings in New Zealand. 76 An order for the liquidation of the assets in New Zealand of an overseas company under Part 16 of the 1993 Act will not be of much significance if the overseas company has no assets in New Zealand, except to the extent that it may permit officers of the company present in New Zealand to be questioned about the existence of assets or confer other powers on the liquidator (for example, to set aside preferences); (c) be the subject of enforcement proceedings in Australia, under the TTPA, once that Act is in force. Because New Zealand judgments will almost invariably be enforceable in Australia under the TTP A, regardless of where the proceedings were served, a defendant who is resident in Australia or who has significant assets in Australia will not have the option of doing nothing, even if they are served somewhere other than Australia; (d) be the subject of enforcement proceedings against the defendant in other jurisdictions. For defendants with no significant assets in New Zealand (or Australia, post-TTPA), this is the most serious risk. Before deciding to do nothing, the defendant must carefully analyse his or her exposure to enforcement in other jurisdictions. In each jurisdiction where the defendant has substantial assets, advice should be sought on the enforceability of a judgment obtained in New Zealand by default in the circumstances of that case. So far as enforcement in most common law countries is concerned, the crucial factor will be whether the defendant is resident (or possibly, present) in New Zealand, or has submitted to New Zealand jurisdiction. (As noted above, once the TTPA is in force New Zealand judgments will be readily enforceable in Australia without any jurisdictional criteria being applied, so doing nothing will not be a realistic option for defendants exposed to enforcement in Australia because they are resident there, or have assets there.) The position in relation to enforcement in Singapore, for example, is essentially the same as the New Zealand position discussed in section 5 below. A New Zealand default judgment obtained after service of New Zealand proceedings outside New Zealand is not generally enforceable in Singapore unless the defendant was resident in New Zealand, or submitted or agreed to submit to New Zealand jurisdiction. A Singapore resident with no assets in New Zealand, who is confident that he or she will not in the future have assets in, or wish to visit, New Zealand, could consider ignoring New Zealand proceedings where there has been no previous agreement, explicit or implicit, to submit the dispute to the New Zealand courts. The same is not, however, true for a defendant with assets in New York, for example: it appears that New York courts will enforce default judgments from another jurisdiction based on service out of that jurisdiction if New York law would permit service outside 75

76

Among assets, the defendant should take into account debts due from New Zealand debtors, which may be able to be the subject of a charging order in New Zealand (see Dicey at 1197- 1202). See Insolvency Act 2006, ss 17, 18, 20, IO 1- 102 ; Companies Act 1993, s 342 and Schedule 9; Dicey chapters 30 and 3 I.

37

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

New York in the same circumstances (see Porisini v Petricca 456 NYS 2d 888 (NY App Div 1982), and for similar developments in California see Bank of Montreal v Kough 612 F 2d 467 (9th Circuit, 1980)). Before taking the "do nothing" option, the defendant should be made fully aware of the risk that is posed by choosing not to defend a claim, where there is a good substantive defence. Corporations which may be considered by the courts of another jurisdiction to have been present in New Zealand by an agent, or by virtue of the presence of a subsidiary, should be particularly cautious about doing nothing (see Adams v Cape Industries pie [1990] 2 WLR 657 at 774-5). (b)

Option two - object to New Zealand jurisdiction

(i)

a notice of opposition; and

(ii)

an affidavit by or on behalf of the defendant in answer to the affidavit by or on behalf of the plaintiff; and

(b) may, under subclause (8), give any other directions that appear necessary regarding any further steps in the proceeding.

Rule 5 .49(2) is intended to remove the doubt that existed at common law about whether an appearance to protest jurisdiction constituted a submission to jurisdiction which might, if the protest failed and judgment was later entered by default, result in that judgment being enforceable in other jurisdictions (Dicey pp 454-455). A defendant can safely file an appearance under r 5.49: if the objection succeeds, that is an end of the matter; if it fails, the defendant still has the option of doing nothing, and has not altered his or her position.

The defendant served abroad under r 6.27 or 6.28 may object to the jurisdiction of the New Zealand High Court. High Court Rule 5.49 provides: 5.49 Appearance and objection to jurisdiction

Defendant or plaintiff may make the next move

(1) A defendant who objects to the jurisdiction of the court to hear and determine the proceeding may, within the time allowed for filing a statement of defence and instead of so doing, file and serve an appearance stating the defendant's objection and the grounds for it.

Once an appearance has been filed under r 5.49(1), either: (a) the defendant may apply to the court to dismiss the proceeding for want of jurisdiction (r 5.49(3)); or

(2) The filing and serving of an appearance does not operate as a submission to the jurisdiction of the court.

(b) the plaintiff may apply to the court to set aside the appearance (r 5.49(5)).

(3) A defendant who has filed an appearance may apply to the court to dismiss the proceeding on the ground that the court has no jurisdiction to hear and determine it.

In either case, the court will consider whether or not it has jurisdiction to hear and determine the proceeding.

(4) The court hearing an application under subclause (3) must,(a) if it is satisfied that it has no jurisdiction to hear and determine the proceeding, dismiss the proceeding; but (b) if it is satisfied that it has jurisdiction to hear and determine the proceeding, dismiss the application and set aside the appearance. (5) At any time after an appearance has been filed, the plaintiff may apply to the court by interlocutory application to set aside the appearance. (6) The court hearing that application must, (a) if it is satisfied that it has jurisdiction to hear and determine the proceeding, set aside the appearance; but (b) if it is satisfied that it has no jurisdiction to hear and determine the proceeding, dismiss both the application and the proceeding. (7) To the extent that an application under this rule relates to service of process effected outside New Zealand under rule 6.27 or 6.28, it must be determined under rule 6.29. (8) The court, in exercising its powers under this rule, may do so on any terms and conditions the court thinks just and, in particular, on setting aside the appearance it may extend the time within which the defendant may file and serve a statement of defence and may give any directions that appear necessary regarding any further steps in the proceeding in all respects as though the application were an application for directions under rule 7.9.

High Court Rule 5.49(7) provides that applications relating to service of process outside New Zealand must be determined under r 6.29 (discussed in more detail below). This requirement does not however restrict a court's ability to make an order on terms under r 5.49(8), or under the Court's inherent jurisdiction: Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [66]. If the court concludes that it does not have jurisdiction, the proceeding must be dismissed. If the court concludes that it does have jurisdiction, the defendant's r 5.49(1) appearance will be set aside. A defendant may, for commercial or other reasons, seek certainty as to whether the New Zealand courts have jurisdiction over the proceeding. However the better strategy for a defendant will usually be to await an application by the plaintiff to set aside the appearance. The plaintiff may not pursue the claim further. If the plaintiff does, then the application may flush out significant information about the case being pursued by the plaintiff. Although the commentary in McGechan on Procedure (HR 5.49.11) suggests that a defendant will be at risk of interlocutory processes (eg discovery), having filed a document with an address for service in the r 5.49 appearance, 77 the better view is that a defendant could resist such steps on the ground that the court's jurisdiction has not yet been established. In particular, it seems reasonably clear that an appearance under protest is not a pleading, despite the suggestion to the contrary in the McGechan commentary, as it does not plead to the merits of the case and its core purpose is to object to further steps being taken in the proceeding. It is the plaintiffs responsibility to establish jurisdiction, assuming that it wishes to pursue the proceeding.

(9) If the appearance set aside has been filed in relation to a proceeding in which the plaintiff has applied for judgment under rule 12.2 or 12.3, the court(a) must fix the time within which the defendant may file and serve -

38

77

Note that judgment cannot be entered by default, given r 15 .3.

39

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

A defendant should not take any interlocutory steps sought by another party unless required to do so by the court, and should maintain a consistent line of opposition on the grounds of want of jurisdiction, where necessary referring to the court any steps which the plaintiff purports to take prior to resolving the protest. Any application to the court to resolve such issues should be made explicitly without submission to jurisdiction. Where an appearance is set aside, the court has power to enlarge time for filing a statement of defence, and to give any other directions that may be appropriate. The court will normally make orders to enable the defendant to file a defence or take any other necessary steps (see Equiticorp Finance Group Ltd v Cheah [1989] 3 NZLR 1 at 7 (CA) and 15 (PC)). Where summary judgment is sought against a foreign defendant, the court is required to enlarge the time for filing a notice of opposition and affidavit (r 5.49(9)). A challenge to jurisdiction must be resolved before an application for summary judgment is heard (Advanced Cardiovascular Systems Inc v Universal Specialities Ltd [1997] 1 NZLR 186 at 189, and see section 4.2(1) above).

Court's discretion whether to assume jurisdiction

As noted above, any objection to jurisdiction by a defendant served outside New Zealand under r 6.27 or 6.28 must now be determined under the new r 6.29. Rule 6.29 sets out what the party effecting service must establish once a defendant has protested jurisdiction under r 5.49, if the claim is to be heard by the New Zealand court: 6.29 Court's discretion whether to assume jurisdiction

(1) If service of process has been effected out of New Zealand without leave, and the court's jurisdiction is protested under rule 5.49, the court must dismiss the proceeding unless the party effecting service establishes(a) that there is(i)

a good arguable case that the claim falls wholly within 1 or more of the paragraphs of rule 6.27; and

(ii)

the court should assume jurisdiction by reason of the matters set out in rule 6.28(5)(6) to (d); or

(b) that, had the party applied for leave under rule 6.28,-

Circumstances in which objection to jurisdiction cannot succeed

An objection to jurisdiction cannot succeed if jurisdiction is founded as of right, by service within New Zealand personally or under an agreement, or on an agent or attorney. Nor can an objection to jurisdiction succeed if the defendant has submitted to New Zealand jurisdiction contractually, or by commencing proceedings in New Zealand, or by taking substantive steps in the New Zealand proceeding brought by the plaintiff (Donald Export Trading Ltdv Vandevelde PVBA CA 53/81, 2 June 1981), and see generally Dicey r 25 and Cheshire & North pp 370-371). However, a defendant who cannot object to New Zealand jurisdiction can still apply to stay proceedings on the basis that New Zealand is forum non conveniens: see option 3 below.

So take care before you file anything but an appearance under protest!

The risk of inadvertently submitting to jurisdiction means that a defendant served out of New Zealand should be most careful about filing any document or application other than an appearance under protest under r 5.49. A step which is necessary or useful only if the New Zealand court does have jurisdiction will constitute a submission to New Zealand jurisdiction (Equiticorp Industries Group Ltd v Hawkins [1991] 3 NZLR 700, Air Nauru v Niue Airlines Ltd [1993] 2 NZLR 632). A defendant probably does not submit to New Zealand jurisdiction by seeking a stay on the grounds of forum non conveniens (Williams & Glyn's Bank pie v Astra Dinamico Cia Naviera SA [1984] 1 All ER 760 (HL) or by applying to have orders affecting property set aside (Laurie v Carroll (1958) 98 CLR 31 O at 334-6), provided that an objection to jurisdiction has previously been filed, or is filed at the same time. In Equiticorp Industries Group Ltd v Hawkins, it was held that an application for security for costs in relation to the determination of a protest to jurisdiction, and an associated application for production of a document, did not constitute submission to New Zealand jurisdiction. 78 See generally Dicey pp 356-360 and Cheshire & North p 370-371.

78

See also Kunzang v Gershwin Hotel HC Auckland CP 3 I 8sd99, 19 September 2000 at para 22(m) and Concrete Ezy Pumps Ltd v Johansen HC Dunedin CP 7/00, 26 October 2000 where the second third party entered an appearance under protest to jurisdiction and applied to dismiss the proceeding, and in the alternative sought security for costs.

40

(i)

leave would have been granted; and

(ii)

it is in the interests of justice that the failure to apply for leave should be excused.

(2) If service of process has been effected out of New Zealand under rule 6.28, and the court's jurisdiction is protested under rule 5.49, and it is claimed that leave was wrongly granted under rule 6.28, the court must dismiss the proceeding unless the party effecting service establishes that in the light of the evidence now before the court leave was correctly granted. (3) When service of process has been validly effected within New Zealand, but New Zealand is not the appropriate forum for trial of the action, the defendant may apply for a stay, or for a dismissal of the proceeding under rule 15.1.

When a plaintiff has served proceedings without leave under r 6.27 If the defendant has protested jurisdiction when service has been effected without leave, the burden falls on the plaintiff to establish that there is a good arguable case that the whole of the claim falls within the scope of 6.27, and that the court should assume jurisdiction because: (a) there is a serious issue to be tried on the merits; and (b) New Zealand is the appropriate forum for the trial; and (c) any other relevant circumstances support an assumption of jurisdiction. Where r 6.29(1)(a) applies, the court conducts a two-stage inquiry. The plaintiff must first establish that there is a good arguable case that the claim falls wholly within one or more of the paragraphs of r 6.27. This part of the inquiry may be regarded as a gateway or threshold which must be established before moving to consider the "stage two" issues: Wing Hung Printing Company v Saito Offshore Pty Ltd [2011] 1 NZLR 754 (CA). Rule 6.29 requires separate consideration of each cause of action. At the first "threshold" stage of the inquiry, the question whether a particular cause of action falls within r 6.27 will depend on which (if any) of the circumstances set out in that rule applies: Wing Hung at [71].

41

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

NZLS CLE Seminar• Private International Law

The "good arguable case" does not relate to the merits of the plaintiff's case but rather to the question of whether the claim falls within one or more of the categories set out in r 6.27. It may be necessary, however, to consider questions of law (or mixed questions of fact and law) as part of this analysis, for example to ascertain whether there is a good arguable case that a contract was made in New Zealand: Wing Hung at [33]. The good arguable case test does not require the plaintiff to establish a prima facie case, recognising that disputed questions of fact cannot be readily resolved on affidavit evidence. However there must be a sufficiently plausible foundation established that the claim falls within one or more of the headings in r 6.27(2): Wing Hung at [41]. If the party effecting service is able to satisfy the first stage test, then the Court will consider whether it should assume jurisdiction by reason of the matters set out in r 6.28(5)(b) to (d) (see section [4.2(f)] above). This means the plaintiff will have to establish that:

•

there is a serious issue to be tried on the merits; and

•

New Zealand is the appropriate forum for the trial; and

•

any other relevant circumstances support an assumption of jurisdiction.

Asia Bank v National Mutual Life Nominees (No 2) [1989] 2 NZLR 50 (CA) at 54. Relevant considerations identified in Wing Hung at [30] include: (a) the nature and extent of the connection of the claim to New Zealand; (b) the extent to which the claim falls within the letter and spirit of the rule relating to service overseas without leave; (c) the strength of the claim on the merits; (d) whether New Zealand is the appropriate forum for the litigation; and (e) any other circumstances relevant to the exercise of discretion. In practice, these considerations tend to overlap. Some care is required in applying authorities under the former Rules, given the explicit guidance on both process and the criteria for assuming jurisdiction that is now set out in the Rules: Wing Hung at [31]. (c)

Option three - apply for a stay on the grounds of forum non conveniens

Rule 6.29(1)(b) provides an alternative path for establishing New Zealand jurisdiction where proceedings were served outside New Zealand in reliance on r 6.27, but the plaintiff is not able to establish that the claim falls wholly within r 6.27: Wing Hung at [69]. The plaintiff must establish that there is a good arguable case that had the plaintiff applied for leave under rule 6.28, leave would have been granted; and it is in the interests of justice that the failure to apply for leave should be excused. In order to show that leave would have been granted, the plaintiff will need to establish that:

A defendant may apply for a stay of proceedings in New Zealand on the grounds that New Zealand is forum non conveniens - that is, that:

(a) the claim has a real and substantial connection with New Zealand;

(See section 4.6 below for a discussion of forum conveniens and forum non conveniens.)

(b) there is a serious issue to be tried on the merits;

Where the defendant objects to jurisdiction under r 5.49 and is arguing that New Zealand is not forum conveniens in that context, it is unnecessary to make a separate application for a stay on the grounds that New Zealand is forum non conveniens. 79 Where a defendant is served outside New Zealand, an objection to jurisdiction can be filed on the grounds that New Zealand is not forum conveniens, even where no other ground is available. The r 5.49 approach has advantages for an overseas defendant. A r 5.49 application is expressed not to be a submission to New Zealand jurisdiction. An application under r 15.1, even when coupled with a r 5.49 application, may be treated as a submission to New Zealand jurisdiction for some purposes. Although a New Zealand court seems unlikely to take that view (see Equiticorp Industries Group Ltd v Hawkins [1991] 3 NZLR 700; Laurie v Carroll (1958) 98 CLR 31 O; and Dicey at 359), there is always the risk that a foreign court asked to enforce a New Zealand default judgment, given after the defendant's application failed and the defendant took no further steps, might see the r 15.1 application as a submission (see Dicey at 358-359). A r 15.1 application made before any objection to jurisdiction may well be seen by a foreign court as a submission to New Zealand jurisdiction.

(c) New Zealand is the appropriate forum for the trial; and (d) any other relevant circumstances support an assumption of jurisdiction. The "interests of justice" test in r 6.29( 1)(b) encompasses a broad range of considerations. The Court of Appeal has expressed the view that it would be undesirable to place any constraints on matters which might fall within that broad rubric: Wing Hung at [49]. When a plaintiff has served proceedings with leave under r 6.28 Rule 6.29(2) applies where service of process has been effected out of New Zealand with leave under rule 6.28, and the court's jurisdiction is protested under rule 5.49 on the grounds that leave should not have been granted under rule 6.28. The rule provides that the court must dismiss the proceeding unless the party effecting service establishes that in the light of the evidence now before the court, leave was correctly granted. General principles regarding the application of r 6.29 A court will not lightly exercise its jurisdiction to assume jurisdiction over foreign parties: Poynter v Commerce Commission [2010] 3 NZLR 300 at [43]. The ultimate issue is whether there are sufficient grounds for the Court properly to assume jurisdiction: Wing Hung Printing Co v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [30], citing Kuwait 42

(a) there is another forum which has jurisdiction to hear the claim; (b) in which the case can more suitably be tried for the interests of all the parties and for the ends of justice.

The other advantage of a r 5.49 application is that in that context, the burden falls on the plaintiff to show that New Zealand is forum conveniens. On a stay application, the burden falls on the defendant to show that New Zealand is forum non conveniens. As noted 79

Although note that in the summary judgment context, if the Court concludes that New Zealand is the appropriate forum for the summary judgment application to be heard, this does not preclude a later (or further) application for a stay based on forum non conveniens in relation to the trial.

43

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

above, the r 5.49 option is not available where a foreign defendant has submitted to New Zealand jurisdiction. A submission to New Zealand jurisdiction does not, however, preclude an application for a stay on the grounds that New Zealand is forum non conveniens (see section 4.6 below). An application for a stay on the grounds that New Zealand is forum non conveniens may in some cases become appropriate at a later stage in proceedings. For example, identical proceedings may subsequently have been brought in another forum, and may be further advanced than the New Zealand proceedings, to the point where it is more appropriate for those proceedings to continue and for the New Zealand proceedings to be stayed. The situation may also arise where litigation on related (but not identical) issues is taking place simultaneously in two different jurisdictions. In some cases, it will be appropriate for one of the proceedings to be stayed. In Mackay Refined Sugars (NZ) Ltd v New Zealand Sugar Co Ltd [1997] 3 NZLR 476, the Court expressed the view that the foundation for such a stay rests principally on the Court's power to control its own procedure so as to avoid abuse of its process and the process of other courts, to which our courts extend comity (seep 481). The Court adopted the summary of matters to be taken into account from Sterling Pharmaceuticals (NZ) Ltd v Boots Co (NZ) Ltd (No 2) [1991] 2 NZLR 634 (see also Dicey at 482-484 and McLachlan Lis Pendens in International Litigation (Nijhoff, Leiden, 2009), Ch 2.) (d)

Option four - defend the action in the normal way

A defendant who has exhausted the options of challenging jurisdiction, and objecting to venue on the grounds of forum non conveniens, is left with options one and four: do nothing, or defend the action in the normal way. In some cases, there will be sound tactical reasons for defending the action without taking any point about jurisdiction or forum conveniens. The defendant may prefer to litigate in New Zealand because for example it is cheaper, or because an unsuccessful plaintiff will be required to pay the defendant's costs (unlike in some other jurisdictions), or because they wish to bring a counterclaim against the plaintiff in New Zealand in relation to the same dispute in any event.

The defendant who takes this course must however appreciate that, having submitted to New Zealand jurisdiction and participated in a hearing, any judgment given against them is likely to be enforceable in many countries throughout the world, and in particular in common law countries. Burden of proof

The new High Court Rules have resolved earlier uncertainties regarding burden of proof in the context of protests to jurisdiction. It is now quite clear that where a defendant has filed a protest to jurisdiction, the plaintiff has the burden of establishing that the court should assume jurisdiction under r 6.29.

Similarly, if the defendant has submitted to New Zealand jurisdiction, the defendant must establish that New Zealand is forum non conveniens.

4.4

If proceedings have been validly served in New Zealand, the defendant cannot object to New Zealand jurisdiction. But the defendant may apply for a stay or for a dismissal of the proceeding on the grounds that New Zealand is not the appropriate forum for trial of the action ie is forum non conveniens: rr 6.29(3), 15.1.

A defendant who seeks a stay (or dismissal) on this basis should also file a statement of defence within the time specified in the notice of proceeding: failure to do so may result in judgment being entered by default. The court will grant a stay only if the defendant satisfies it that the New Zealand court is forum non conveniens, that is, that the foreign court is clearly the more appropriate forum for the trial. 80 A stay will usually then be granted unless the court concludes there are circumstances which mean that justice requires that a stay should not be granted. 81 Where a defendant successfully contends that another forum is more appropriate, but there is some doubt about whether the defendant is amenable to that jurisdiction, it will normally be a condition of the grant of a stay (or dismissal) that the defendant agree to submit to that jurisdiction (see, for example, Sodamaster Inc v Micallef (1986) 1 PRNZ 302· and Johnston & Associates Inc v Stewart HC Auckland AD 551-90, 25 February ' See also Dicey pp 475-477. 1991). Where a stay is sought in New Zealand on the grounds that another forum is more appropriate, but the claim would be time-barred in the other forum, the court will normally impose, as a condition of granting a stay, a requirement that the defendant waive the right to rely on the time bar in the proceedings in the other forum. 82 If an objection to New Zealand as the venue under rr 6.29(3) and 15.1 fails, the proceeding will continue as a normal High Court proceeding. If an objection to New Zealand as the venue for hearing a dispute succeeds, the proceeding will normally be stayed rather than dismissed. It is possible for the court to dismiss a proceeding under r 15.1 on the grounds of forum non conveniens. For example, in Sundance Spas NZ Ltd v Sundance Spas Inc [2001] 1 NZLR 111 at [37]the Court held that to stay the proceeding for no purpose other than facilitating a Mareva injunction (now referred to as a freezing order) would be a misuse of procedure for a collateral purpose. 83 In most cases, a stay will be appropriate: if the defendant fails to co-operate 80

81

However if a defendant is served of right in New Zealand and wishes to apply for a stay or dismissal of the proceeding under rr 6.29(3) and 15.l the onus lies on the defendant to establish that New Zealand is forum non conveniens.

82

83

44

Acting for a defendant validly served in New Zealand

See section 4.6 below and Club Mediterranee NZ v Wendell [ 1989] I NZLR 216 (CA); Oilseed Products (NZ) Ltd v HE Burton Ltd (1987) I PRNZ 313; Crane Accessories Ltd v Lim Swee Hee [1989] I NZLR 221; Van Dyck v Van Dyck [1990] 3 NZLR 624; Broadlands Ltd v Murray (1992) 6 PRNZ 523; Bolt v Bolt (1988) 5 NZFLR 104; 4 FRNZ 409; and Spiliada Maritime Corporation v Cansulex Ltd [ 1987] AC 460; [ 1986] 3 All ER 843. Oilseed Products (NZ) Ltd v HE Burton Ltd ( 1987) I PRNZ 3 13; Carberry Exports (NZ) Ltd v Krazzy Price Discount Ltd ( 1985) I PRNZ 279; Bolt v Bolt ( 1988) 5 NZFLR I 04; 4 FRNZ 409; and Spi/iada Maritime Corporation v Cansulex Ltd [1987] AC 460; [1986] 3 All ER 843. See Fitzroy Engineering Limited v Basic HC Wellington CP 258/95 , 14 May 1996); The Pioneer Container [1994] 2 AC 324; [ 1994] 2 All ER 250 (PC); Biddulph v Wyeth Australia Pty Ltd [1994] 3 NZLR 49; and Spiliada Maritime Corporation v Cansulex Ltd [ 1987] AC 460; [1986] 3 ALL ER 843 . Under the new Rules, the plaintiff would have the option to pursue proceedings in New Zealand solely for a freezing injunction in support of substantive proceedings continuing abroad, see below Ch 6.

45

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

NZLS CLE Seminar• Private International Law

with the efficient disposal of the proceedings in the forum he or she contended for, the stay can then be rescinded and the proceeding in New Zealand reactivated (Bramwell v The Pacific Lumber Co Ltd (1986) 1 PRNZ 307 at 312 and Partnership Pacific Ltd v Mellsop (1991) 5 PRNZ 619).

4.5

Acting for a defendant served in Australia under the TTPA

A defendant who has been served with New Zealand proceedings in Australia under the TTPA (after that Act comes into force) does not have the option of protesting jurisdiction under r 5.49. Nor is doing nothing a viable option if the defendant is resident in Australia or has significant assets in that country against which a judgment could be enforced: judgment will be entered by default in New Zealand, and will almost certainly be enforced in Australia under the corresponding Australian legislation (the Trans-Tasman Proceedings Act 2010 (Cth)). So there are two options: (a) defend the proceeding in the normal way; or (b) apply for a stay of the New Zealand proceedings under s 22 of the TTPA.

The "catch-all" provision in s 24(2)(h) means that all factors that have been seen as relevant in the forum conveniens context are likely to be seen as relevant under s 24: see section 4.6 below. The reason that s 24(2)( d) does not apply to exclusive choice of court agreements to which s 25(1) applies is thats 25 requires a stay to be granted where an exclusive choice of court agreement designates an Australian court as the court to determine the relevant dispute. It also requires a stay to be refused if the parties have chosen a New Zealand court as the exclusive forum. The special provision that is made for exclusive choice of court agreements anticipates the Hague Choice of Court Convention, which both Australia and New Zealand have indicated they are likely to ratify and implement. The exceptions to the binding effect given to such clauses set out in s 25 mirror the exceptions in that Convention. A New Zealand court may stay proceedings despite an exclusive choice of court agreement that designates a New Zealand court if the agreement is null and void under the law of New Zealand (including private international law rules). A stay in favour of an Australian court designated in an exclusive choice of court agreement may be refused if: 84 (a) that agreement is null and void under the law (including the rules of private international law) of Australia; (b) under New Zealand law, a party lacked the capacity to conclude it;

A stay application under s 22 must be made within 30 working days after service of the proceedings, or any shorter or longer period determined by the Court. A defendant can seek an extension of time to apply for a stay, either before or after the 30 working day period has expired. It is also possible for a plaintiff to seek a direction that the applicable period be less than 30 working days, where for example the proceedings are urgent. The TTP A provides for a stay to be granted if an Australian court has jurisdiction to determine the matters in issue between the parties, and is the more appropriate court to determine those matters (s 24). Section 24(2) sets out the factors relevant to such an application, which broadly correspond with the factors relevant to the traditional forum conveniens analysis: (2) In determining whether an Australian court is the more appropriate court to determine the matters in issue between the parties to the proceeding, the New Zealand court must not take into account the fact that the proceeding was commenced in New Zealand, but must take into account the following matters: (i)

the places of residence of the parties or, if a party is not an individual, its principal place of business:

(ii)

the places of residence of the witnesses likely to be called in the proceeding:

(iii)

the place where the subject matter of the proceeding is situated:

(iv)

any agreement between the parties about the court or place in which those matters should be determined or the proceeding should be instituted (other than an exclusive choice of court agreement to which section 25(1) applies):

(v)

the law that it would be most appropriate to apply in the proceeding:

(vi)

whether a related or similar proceeding has been commenced against the defendant or another person in a court in Australia:

(vii)

the financial circumstances of the parties, so far as the New Zealand court is aware of them:

(viii)

any other matters that the New Zealand court considers relevant.

46

(c) giving effect to it would lead to a manifest injustice or would be manifestly contrary to New Zealand public policy; (d) for exceptional reasons beyond the control of the parties, it cannot reasonably be performed; or (e) the designated court has decided not to determine the proceeding. Section 25(4) defines the term "exclusive choice of court agreement" in a manner that excludes contracts to which a consumer is a party, and employment contracts (again, this reflects the scope of the Choice of Court Convention). So the mandatory rules about stays in s 25 apply mainly to so-called business to business or "B2B" contracts. Outside the s 25 regime, the discretionary approach in s 24 remains applicable. A stay may be granted on conditions: s 26. The TTPA contains a number of innovative provisions that are designed to reduce the difficulty and cost for an Australian defendant of making a stay application under s 24. The possibility of determining an application for a stay on the papers, without an appearance, is provided for ins 23(1). But there must be a hearing if either party requests one. If there is a hearing, then under s 23(4) and s 39 the defendant or the defendant's Australian counsel can appear remotely by an audio or audio-visual link for the purposes of that hearing, provided that the necessary facilities are available or can reasonably be made available: s 23(4). The defendant's counsel need not be admitted in New Zealand in order to appear on such applications. The TTPA deals with a number of process issues in relation to remote appearances from Australia in ss 40 - 43. The Court has a more general power to permit remote appearances by an Australian defendant or the defendant's counsel under ss 37 and 38. The power can be exercised in

84

Trans-Tasman Proceedings Act 20 I0, s 25(2).

47

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

NZLS CLE Seminar• Private International Law

any case, but is most likely to be relevant where proceedings were served under the TTPA, or where enforcement of a judgment is sought under the TTPA: s 37(2).

4.6

Factors relevant to whether New Zealand is the appropriate forum

The question of whether New Zealand is the appropriate forum for determination of a dispute can arise in a number of contexts: (a) where leave is sought to serve proceedings abroad under r 6.28; (b) where a defendant protests jurisdiction under r 5 .49; (c) where a defendant served in New Zealand seeks a stay or dismissal under r 6.29(3); (d) where a defendant served in Australia under the TTP A seeks a stay under s 22. Where the issue arises under s 22 of the TTP A there are mandatory factors that the court is required to take into account under s 24, as discussed in section 4.5 above. The list overlaps substantially with the factors that the courts have always taken into account in the forum (non) conveniens context, and the "catch-all" reference in s 24(2)(h) to any other matters that the New Zealand court considers relevant confrrms that all of the factors seen as relevant in the forum (non) conveniens context will also be taken into account in the TTP A context. The principles relevant to arguments of forum conveniens and forum non conveniens were reviewed by the House of Lords in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460; [1986] 3 All ER 843. That case has been followed and referred to extensively in 85 New Zealand. The Court of Appeal recently confrrmed in Wing Hung Printing Co v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [30] that in determining whether New Zealand is the appropriate forum, the Court will continue to be guided by the matters canvassed in Spiliada. It is important to emphasise that if no court other than a New Zealand court can grant the relief sought by the plaintiff, no question of forum conveniens will arise as there can be no other appropriate forum (see Apple Computer Inc v Apple Corps SA [1990] 2 NZLR 598; Mackay Refined Sugars (NZ) Ltd v New Zealand Sugar Co Ltd [1997] 3 NZLR 476; and PDL Industries Limited v Eastern Sources Housewares Limited HC Christchurch , CP 184/96, 9 October 1997). The forum which is said to be more appropriate must be a forum which is genuinely available to the plaintiff, in the sense that the plaintiff can obtain a fair hearing of its claims (see, for example, Samoa Insurance Company Limited v Boston Marks Groups HC Auckland CP 632/94, 28 May 1996, where the plaintiff alleged (unsuccessfully) that it would not obtain a fair trial in Samoa). If more than one forum is available, a wide range of factors will be relevant to the question of which forum is more appropriate. Relevant factors include:

85

See NZ/ Insurance New Zealand Ltd v Hinton Hill and Coles Ltd [1996] I NZLR 203; Biddulph v Wyeth Australia Pty Ltd [I 994] 3 NZLR 49; McConnell Dowell Constructors Ltd v Lloyd's Syndicate 396 [I 988] 2 NZLR 257 (CA)· Longbeach Holdings Ltd v Bhanabhai & Co Ltd [1994] 2 NZLR 28 (CA; and Club Mediterranee NZ v Wendeti [ I 989] I NZLR 216. Other useful discussions of the concepts can be found in Oilseed Products (NZ) Ltd v HE Burton Ltd ( l 987) I PRNZ 313 and Crane Accessories Ltd v Lim Swee Hee [ 1989] I NZLR 22 l.

48

(a) the relative cost and convenience of proceeding in each jurisdiction: McConnell Dowell Constructors Ltd v Lloyd's Syndicate 396 [1988] 2 NZLR 257 (CA) at 277; Club Mediterranee NZ v Wendell [1989] 1 NZLR 216 (CA); Oilseed Products (NZ) Ltd v HE Burton Ltd (1987) 1 PRNZ 313; Crane Accessories Ltd v Lim Swee Hee [1989] 1 NZLR 221 at 230; PDL Industries Limited v Eastern Sources Housewares Limited HC Christchurch, CP 184/96, 9 October 1997; Concrete Ezy Pumps Ltd v Johansen HC Dunedin CP 7/00, 26 October 2000; Lubbe v Cape pie [2000] 1 WLR 1545; [2000] 4 All ER 268 (HL); Wing Hung Printing Company v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at 45; and Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460; [1986] 3 All ER 843; (b) the location and availability of documents and witnesses: McConnell Dowell Constructors Ltd v Lloyd's Syndicate 396 [1988] 2 NZLR 257 (CA); Club Mediterranee NZ v Wendell [1989] 1 NZLR 216 (CA); Longbeach Holdings Ltd v Bhanabhai & Co Ltd [1994] 2 NZLR 28 (CA) at 35; Oilseed Products (NZ) Ltd v HE Burton Ltd (1987) 1 PRNZ 313; and Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, [1986] 3 All ER 843; Kunzang & Ors v Gershwin & Anor HC Auckland CP 318sd99, 19 September 2000; Samoa Insurance Company Limited v Boston Marks Groups HC Auckland CP 632/94, 28 May 1996; Wing Hung Printing Company v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [45]. The importance of this factor seems likely to diminish as methods of taking evidence by video link from abroad become more effective and more widely available (see section 7.1 below); (c) the existence of litigation in another jurisdiction, and the state of these proceedings: Carberry Exports (NZ) Ltd v Krazzy Price Discount Ltd (1985) 1 PRNZ 279 at 284-5; McConnell Dowell Constructors Ltd v Lloyd's Syndicate 396 [1988] 2 NZLR 257; Primesite Outdoor Advertising Ltd v City Clock Australia Ltd (1991) 4 PRNZ 472; Mackay Refined Sugars (NZ) Ltd v New Zealand Sugar Co Ltd [1993] 3 NZLR 476; Wing Hung Printing Company v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [46]; (d) whether all relevant parties are subject to New Zealand jurisdiction, so that all issues can be resolved in one hearing: McConnell Dowell Constructors Ltd v Lloyd's Syndicate 396 [1988] 2 NZLR 257 (CA) at 274 and 277; Longbeach Holdings Ltd v Bhanabhai & Co Ltd [1994] 2 NZLR 28 (CA) at 35 and 36; Curnow Shipping Ltd v National Bank of New Zealand Ltd (1990) 2 PRNZ 67; and Marine Helicopters Ltd v McAlpine Helicopter Services Ltd (1991) 5 PRNZ 625; Cockburn v Kinzie Industries Inc (1988) 1 PRNZ 243 at 249-250; Mackay Refined Sugars (NZ) Ltd v New Zealand Sugar Co Ltd [1993] 3 NZLR 476; (e) whether the law governing aspects of the dispute is New Zealand law or foreign law: other things being equal, it is preferable for the law of a jurisdiction to be applied by the courts of that jurisdiction: Primesite Outdoor Advertising Ltd v City Clock (Australia) Ltd (1991) 4 PRNZ 472 and Owners of Cargo Lately Laden on Board the Ship or Vessel Eleftheria v The Eleftheria (Owners) [1970] P 94, [1969] 2 All ER 641. See Club Mediterranee NZ v Wendell [1989] 1 NZLR 216 (CA) at 220; Johnston & Associates Inc v Stewart HC Auckland AD 551 /90, 25 February 1991 ; Chambers v Riches HC Rotorua CP 4/01, 27 July 2001; Wing Hung Printing Company v Saito Offshore Pty Ltd [2011] 1 NZLR 754 at [45]. The applicability of New Zealand law may carry less weight where the other forum is England, where the Judges have experience in interpreting New Zealand legislation, or another forum where the law relating to the issues in dispute is similar to that of New Zealand: Society of Lloyd's & Oxford Members ' Agency Ltd v Hyslop [1993] 3 NZLR 135 (CA) per Richardson J;

49

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

(f) the existence of a contract which contains an agreement to submit to a particular jurisdiction or a clause relating to the appropriateness of a particular forum: see the discussion in section 4.7 below; (g) the strength of the plaintiffs case: Oilseed Products at 320, Pacific Fundraising Ltd v Universal Australia Pty Ltd (1990) 3 PRNZ 372, Samoa Insurance Company Limited v Boston Marks Groups HC Auckland CP 632/94, 28 May 1996 but note the discussion in Seaconsar Far East Ltd vBank Markazi Jomhouri Islami Iran [1993] 4 All ER456; (h) where any judgment will need to be enforced. It is often more efficient to obtain judgment in the forum where enforcement will take place ( Crane Accessories Ltd v Lim Swee Hee [1989] 1 NZLR 221 at 232; Auckland Receivers Ltd v Diners Club [1985] 2 NZLR 652 at 654; Van Dyck v Van Dyck [1990] 3 NZLR 624; Johnston & Associates Inc v Stewart HC Auckland AD 551/90, 25 February 1991 at 9; Chambers v Riches HC Rotorua CP 4/01, 27 July 2001; Pearson v Visibility International Limited HC Auckland CP 203/97, 19 May 1988 ; Broadlands Ltd v Murray (1992) 6 PRNZ 523. See also Sodamaster Inc v Micallef (1986) 1 PRNZ 302 at 306 which characterised this as a minor consideration; (i) whether the defendant's application is brought to gain a tactical advantage, and not because they genuinely desire a trial in the other forum: The Atlantic Song [1983] 2 Lloyd's LR 394;

(j) procedural advantages in one jurisdiction: McConnell Dowell at 73; Biddulph v Wyeth Australia Pty Ltd [1994] 3 NZLR 49; Chambers v Riches HC Rotorua CP 4/01, 27 July 2001; Pearson v Visibility International Limited HC Auckland CP 203/97, 19 May 1988; (k) a decision in another jurisdiction that it is the forum conveniens: The Pioneer Container [1994] 2 AC 324; [1994] 2 All ER 250 (PC); Biddulph v Wyeth Australia Pty Ltd [1994] 3 NZLR 49; and Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460; [1986] 3 All ER 843. In Oilseed Products (NZ) Ltd v HE Burton Ltd (1987) 1 PRNZ 313, Wallace J emphasised that in applying the test in Spiliada, the interests of all the parties must be considered. In that case, a third party sought a stay of the defendant's claim against it: while Fiji was prima facie the appropriate forum for the third party claim, New Zealand was the appropriate forum for the plaintiffs claim against the defendant and, on an overall view, for the resolution of the entire proceeding. A plaintiff who wishes to establish that New Zealand is forum conveniens in a case where physical evidence or witnesses are located overseas should give some thought to ways in which the cost and inconvenience of obtaining that evidence could be reduced. Apart from the taking of evidence outside of New Zealand (eg by video link or telephone, or the trial judge hearing evidence in another location - see section 7) it would also be sensible to consider making concessions which eliminate the need for some or all of the overseas evidence, or agreeing to meet some or all of the additional costs to the defendant of a trial in New Zealand regardless of the outcome of the proceedings.86

86

See, for example, the discussion in Bayswater Marin e Ltd v NZ! Insurance Ltd HC Auckland CP 185/97, 20 May 1998 at 20.

50

4. 7

Forum clauses

A commercial contract will often contain a clause providing that the parties submit to the jurisdiction of a specified court, or of the courts of a specified country. The clause may simply provide for submission to a particular jurisdiction, or it may provide for exclusive jurisdiction: that is, that all disputes must be litigated in the forum specified, and nowhere else. The drafting of such clauses is considered in section 13 .2 below. (a)

Submission to New Zealand jurisdiction

A plaintiff who wishes to bring an action in New Zealand against a foreign defendant is likely to be able to do so if the action falls within the terms of a clause in a contract to which the plaintiff and defendant are parties, in which the defendant submits to New Zealand jurisdiction. If the defendant has agreed to submit to New Zealand jurisdiction in relation to the dispute which is the subject-matter of the proceedings: (a) the proceedings can be served out of New Zealand without leave, under r 6.27(k); (b) any money judgment obtained against the defendant, even by default, is likely to be enforceable in most other countries, and in particular in other common law countries, unless the defendant can establish one of the defences considered in section 5.2(g) to (i) below. The interpretation of the forum clause is important: it may be narrowly drafted to apply only to certain claims under the relevant contract, or broadly drafted to embrace all claims in connection with the contract, and the dealings between the parties. It is always necessary to check that the dispute to which the proceedings relate is within the scope of the relevant clause. Although there is authority to suggest that a submission to the jurisdiction of a foreign court must be express (Vogel v RA Kohnstamm Ltd [1973] QB 133; and New Hampshire Insurance Co v Strabag Bau AG [1992] 1 Lloyd's Rep 361, 371-372 (CA); Dicey at 600) submission to New Zealand jurisdiction may be inferred from the terms of a contract, and in particular from an agreement to accept service by an agent in New Zealand (Dicey at 359 - see section 4.2(b) above) or possibly from an agreement to arbitrate disputes in New Zealand (Thai-Europe Tapioca Service Ltd v Pakistan [1975] 1 WLR 1485 at 1491). A choice of law clause is not however a forum clause: the agreement of parties to a contract that the contract should be governed by New Zealand law does not amount to a submission to New Zealand jurisdiction (Dicey at 600). The existence of a submission to New Zealand jurisdiction clause does not prevent a defendant from applying for a stay in New Zealand proceedings on the grounds of forum non conveniens (section 4.3(c) above). The defendant's agreement to submit to New Zealand jurisdiction is a relevant factor when considering whether New Zealand is forum non conveniens, but it is not decisive (unless s 25 TTPA applies - see section 4.5 above). Even where the parties have agreed to exclusive New Zealand jurisdiction, the courts retain a discretion to stay proceedings in New Zealand if some other forum is clearly more appropriate (Bramwell v The Pacific Lumber Co Ltd (1986) 1 PRNZ 307 at 310-311; Air Nauru v Niue Airlines Ltd [1993] 2 NZLR 632; Society of Lloyd's & Oxford Members' Agency Ltd v Hyslop [1993] 3 NZLR 135 (where the Court noted that the existence of an exclusive jurisdiction clause places a heavy burden on the party seeking to depart from it, seep 142)). 51

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

NZLS CLE Seminar• Private International Law

(b)

Submission to a foreign jurisdiction

Conversely, a defendant is not entitled to a stay as of right in New Zealand where the parties have agreed to submit to an overseas jurisdiction, although it is relevant to the question whether New Zealand is forum conveniens. (see Pacific Fundraising Limited v Universal Australia Pty Ltd (1990) 3 PRNZ 372; Broadlands Ltd v Murray (1992) 6 PRNZ 523; Evans Marshall & Co Ltd v Betrola SA [1973] 1 WLR 349; [1973] 1 All ER 992 (CA); Contractors Ltd v MTE Control Gear Ltd [1964] SASR 47; and Green v Australian Industrial Investment Ltd (1989) 90 ALR 500 (FCA) at 511 and 512; and Dicey at 538-541; Cheshire & North at 444-448). If the submission to foreign jurisdiction is not expressed to be exclusive, it is of limited significance in determining the forum conveniens (Contractors Ltd v MTE Control Gear Ltd [1964] SASR 47). However, Kerr J in Evans Marshall & Co Ltd v Betrola SA [1973] 1 WLR 349; [1973] 1 All ER 992 (CA), considered that a non-exclusive jurisdiction clause could be relevant where the defendant was served out of the jurisdiction. It is submitted that non-exclusive jurisdiction clauses do have some relevance to the question of where the parties anticipated that their disputes might be litigated, but that they carry little weight (see Evans Marshall & Co Ltd at 360363, 375, 383; a similar conclusion was reached by the Federal Court of Australia in Green v Australian Industrial Investment Ltd (1989) 90 ALR 500 at 511-512). The reason for including a non-exclusive submission to New Zealand jurisdiction clause in a contract with an overseas party will often be to give the New Zealand party the option of suing either in the foreign party's home jurisdiction, where jurisdiction can be obtained as of right, or in New Zealand, where the clause will confer jurisdiction - the clause is not intended to establish any preference for suing in New Zealand rather than abroad, but simply to ensure that suing in New Zealand is possible. Where the parties to a contract have agreed to a foreign jurisdiction as the exclusive forum for resolution for disputes, a plaintiff opposing a stay of New Zealand proceedings carries the burden of showing that there is strong cause for not granting the stay (see Kidd v van Heeren [1998] 1 NZLR 324 at 331; Society of Lloyd's & Oxford Members ' Agency Ltd v Hyslop [1993] 3 NZLR 135 (CA) at 142 and 154; Marine Helicopters Ltd v McAlpine Helicopter Services Ltd (1991) 5 PRNZ 624; Owners of Cargo Lately Laden on Board the Ship or Vessel Eleftheria v The Eleftheria' (Owners) [1970] P 94, [1969] 2 All ER 641; and Evans Marshall & Co Ltd v Betrola SA [1973] 1 WLR 349 at 383 and 384; [1973] 1 All ER 992 (CA). That burden may be discharged if New Zealand is clearly the more appropriate forum for determining the dispute (see Pacific Fundraising Ltd v Universal Australia Pty Ltd (1990) 3 PRNZ 372, where the clause was not in fact an exclusive jurisdiction clause), where the defendant does not genuinely wish to litigate in the foreign forum (The Atlantic Song [1983] 2 Lloyd's Rep 394) or where the foreign court could not grant the relief sought (Ramcorp Ltd v DFC Financial Services Ltd SC NSW BC9003822, 30 April 1990 discussed at (1990) 1 JBFLP 221-223; Apple Computer Inc v Apple Corps SA [1990] 2 NZLR 598); Air Nauru v Niue Airlines Ltd [1993] 2 NZLR 632). Once the TTP A comes into force, an exclusive choice of an Australian court as the forum for determining a dispute will be given effect unless the exceptions set out in s 25 of the TTP A apply: see section 4.5 above. This approach will apply more generally if and when New Zealand accedes to the Hague Choice of Court Convention. In a number of New Zealand cases, the courts have interpreted simple submission to jurisdiction clauses as exclusive jurisdiction clauses. This is clearly wrong, and 52

misconceives the purpose of such clauses. It results in inappropriate weight being given to the clause when considering whether or not to grant a stay (see for example Pacific Fundraising Ltd v Universal Australia Pty Ltd (1990) 3 PRNZ 372). 87 (c)

Clauses relating to forum conveniens

In some contracts the parties seek to address not only issues of jurisdiction, but also of forum conveniens, by providing that neither party will object to the chosen forum on the grounds that it is forum non conveniens (for the drafting of such provisions, see section 13.2 below). There does not appear to be any authority in relation to such clauses, but by analogy with the decisions of the courts in relation to exclusive jurisdiction clauses, it is suggested that: (a) an agreement not to object to New Zealand jurisdiction, or to seek a stay of New Zealand proceedings, on the grounds of forum non conveniens will not prevent a defendant from raising the issue, or the objection from succeeding. The clause does however show clearly that the parties intended disputes to be resolved in New Zealand, and will be a factor pointing towards a hearing of the dispute in New Zealand: the defendant would need to show strong cause for jurisdiction to be declined, or a stay granted; (b) an agreement to submit to the exclusive jurisdiction of a foreign court, and not to challenge that court as forum non conveniens, will be a strong factor pointing towards the stay of any proceedings brought in New Zealand. Such a clause will not however be decisive: if the New Zealand court considers that it is clearly the appropriate forum, it will proceed to determine the dispute.

4.8

Acting for a New Zealand defendant upon whom proceedings in a foreign court have been served

(a)

Obtaining advice in foreign jurisdiction

A New Zealand defendant who has been served with foreign proceedings must make a decision on what steps to take in response to those proceedings. A New Zealand lawyer acting for that defendant should: (a) give advice on the enforceability in New Zealand of any judgment the plaintiff may obtain in default of appearance in the foreign jurisdiction; (b) seek advice from lawyers in the foreign jurisdiction about the options open to the defendant. In most common law jurisdictions, the options will be similar but not identical to the four options facing a foreign defendant served with New Zealand proceedings. The differences may be critical: competent advice on the relevant law is essential. The New Zealand lawyer is likely to play a significant role in instructing the foreign lawyers in relation to substantive proceedings, and any preliminary challenges to 87

Note however that if New Zealand becomes a party to the Hague Choice of Court Convention, choice of court provisions in B2B agreements will be deemed to be exclusive unless they provide otherwise: a reversal of the presumption at common law. So a choice of court agreement that does not specify whether or not it is exclusive will be treated as exclusive, and the consequences of an exclusive choice of court under that Convention would then follow.

53

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Jurisdiction and Forum Conveniens - which court will a dispute be heard in?

jurisdiction or venue. An awareness of which issues are governed by New Zealand law, and which by the foreign law, is essential if the New Zealand lawyer is to know when he or she should be taking advice, and when he or she should be giving it. The New Zealand lawyer is also likely to have an important role in explaining the position in the foreign jurisdiction to his or her client in familiar terms, and "translating" foreign legal concepts. Care must, however, be taken to ensure that assumptions that foreign law is likely to be the same as New Zealand law are not made. Even where similar terms are used in other jurisdictions, particularly in the United States of America, their meaning may be quite different. Once the TTPA comes into force, a New Zealand lawyer will have an even greater role in relation to Australian proceedings served on a New Zealand client in New Zealand under the TTPA. The client can reasonably expect the New Zealand lawyer to be able to give advice on how the trans-Tasman regime operates, and the options open to the client (which mirror those set out in section 4.5 above for the Australian defendant served in New Zealand under the TTPA). If the client wishes to seek a stay of the Australian proceedings, the New Zealand lawyer can file that application and can appear remotely on that application under the Australian provisions corresponding to ss 23 and 37 to 43. The New Zealand end of such appearances is governed by ss 44 to 51 of the TTP A.

or where the plaintiff sues in more than one jurisdiction without substantial reasons for doing so. 88 In Jonmer Inc, the Court made the order sought, noting that where there was no juridical or personal advantage to Maltexo in pursuing the Texan claim, and it appeared that Maltexo was simply holding on to a legalistic right, that could constitute oppress10n. Anti-suit injunctions are discussed in Dicey at 500- 511. 89 Once the TTPA is in force, a New Zealand court will not restrain a person from commencing proceedings in Australia, or from taking a step in an Australian proceeding: TTPA s 28. A key feature of the new Trans-Tasman proceedings regime is that it is the Australian court, not a New Zealand court, that will determine whether or not it is appropriate for the proceedings to be pursued in Australia.

The ability of a New Zealand lawyer to appear on the Australian stay application does not necessarily mean that this is a good idea, however. The benefits in terms of cost need to be weighed carefully against the disadvantages of being less familiar with the Australian courts than local counsel. Where the claim is a substantial one, or local knowledge is likely to be important - for example, in discussing procedural advantages and disadvantages of the two forums - serious consideration should be given to instructing local counsel. (b)

Injunctions to restrain foreign legal proceedings

One remedy which may be available in some circumstances to a defendant against whom an action has been brought in an overseas jurisdiction is to seek an injunction against the plaintiff in New Zealand, restraining the plaintiff from pursuing the foreign proceedings. These are often described as "anti-suit" injunctions. The relevant principles are discussed in Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871 (PC); Airbus Industrie GIE v Patel [1987] AC 871 (PC); Barclays Bank pie v Homan [1993] BCLC 680; and Societe Commerciale de Reassurance v Eras International Ltd (No 2) [1995] 2 All ER 278, and were applied in New Zealand in Jonmer Inc v Maltexo Ltd [1996] 10 PRNZ 119. An injunction of this kind will not often be granted, and will only be available where the plaintiff is amenable to the jurisdiction of the New Zealand court. The only sanction available if the plaintiff disregards the order is the imposition of sanctions for contempt in New Zealand: this will be of no effect unless the plaintiff is present or has assets in New Zealand, or is a party to proceedings in New Zealand ( and thus exposed to entry of judgment in the event of non-compliance) and an injunction will not be granted if it will not be an effective remedy. In considering making an order of this kind, the court will first seek to determine the natural forum for the dispute, and, if that is New Zealand, then secondly assess whether it is vexatious or oppressive for the other proceeding to continue. Dual proceedings are not of themselves vexatious or oppressive. Examples of vexatious or oppressive behaviour would be where the plaintiff has brought proceedings which could not possibly succeed, 54

88 89

Societe Nationale lndustrielle Aerospatiale v Lee Kui Jak [1987] AC 871 (PC) at 893-4. See also Campbell McLachlan Lis Pendens in International Litigation (Nijhoff, Leiden, 2009) at 157 - 179 and Thomas Raphael The Anti-suit Injunction (Oxford UP, 2008).

55

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

5.

5.1

ENFORCEMENT OF FOREIGN JUDGMENTS

The effect of foreign judgments in New Zealand

Foreign judgments have no direct operation in New Zealand. It is not possible to levy execution in New Zealand on the basis of a foreign money judgment, and the New Zealand courts will not impose sanctions of any kind for failure to comply with an order made by a foreign court. A person who has obtained a foreign judgment may however be able to enforce that judgment in New Zealand, either by bringing an action in the New Zealand courts based on the judgment or by registering the judgment under the Reciprocal Enforcement of Judgments Act 1934. When the TTPA comes into force, a wide range of Australian judgments will be able to be enforced in New Zealand under that Act. The common law has enforced foreign judgments for some three hundred years. Initially, the common law courts would entertain an action based on a foreign judgment on the grounds of international comity. The current theory on which foreign judgments may be enforced is known as the doctrine of obligation. Where a person is subject to the jurisdiction of a foreign court, that person has an obligation to comply with an order given by that court (see Schibsby v Westenholz (1870) LR 6 QB 155, at 159; Adams v Cape Industries pie [ 1990] 2 WLR 657 at 678-680 (Scott J), 731-732 (CA)). A foreign judgment creditor can bring an action in New Zealand on the foreign judgment which, if successful, will result in a New Zealand judgment in the creditor's favour which can be enforced in any of the normal ways against the judgment debtor and his or her property in New Zealand. There are a number of defences that the foreign judgment debtor can raise, however, which are considered below. The Reciprocal Enforcement of Judgments Act 1934 provides a simplified procedure for enforcing certain judgments from the courts of some, principally Commonwealth, countries. Specified types of judgment can be registered in the High Court, and enforced as if they were New Zealand judgments. Judgments to which the Act applies cannot be enforced at common law (s 8), so it is important to ascertain which procedure is appropriate. The TTP A will, from the date on which it comes into force (expected to be in the second half of 2012), provide a simple and relatively inexpensive mechanism for enforcing Australian judgments granted after that date. The 1934 Act will no longer apply to Australian judgments granted after that date. The TTP A regime for enforcement of Australian judgments is discussed in section 5.4 below. A little-used procedure for enforcement of judgments of courts of some Commonwealth countries, where the 1934 Act does not apply, is set out in s 56 of the Judicature Act 1908, discussed in section 5.5 below. This provides an alternative to enforcement at common law, for judgments from the relevant countries. A foreign judgment may also give rise to a cause of action estoppel or issue estoppel as between parties to subsequent New Zealand litigation. The recognition of foreign judgments as the basis for an estoppel is discussed in sections 5.2(j) and 5.3(g) below. 56

57

NZLS CLE Seminar• Private International Law

5.2

Goddard and Mclachlan • Enforcement of Foreign Judgments

Enforcement of foreign judgments at common law

The rules of common law relating to the enforcement of foreign judgments have been treated by New Zealand courts as being the same in New Zealand as in England, and the commentary in Dicey chapter 14 is a useful source of guidance. The common law is however of decreasing practical importance in England, because of legislation giving effect to European Community treaties relating to enforcement of judgments. The law relating to EC judgments can also be expected to have some influence on the development of the common law in England. These factors may eventually lead to separate development of New Zealand and English common law in this field.

jurisdiction, and does not appear in the proceedings, any judgment entered in England will be unenforceable in New Zealand (see Sharps Commercials Ltd v Gas Turbines Ltd [1956] NZLR 819). Dicey identifies (at 588-589) four cases in which a court in a foreign country will be recognised as having jurisdiction to give a judgment capable of enforcement at common law:

(a) if the judgment debtor was, at the time the proceedings were instituted, present92 in the foreign country; (b) if the judgment debtor was plaintiff, or counterclaimed, in the proceedings in the foreign court;

(a)

Which foreign judgments are enforceable at common law in New Zealand?

A judgment inter partes of a foreign court will be enforced in New Zealand at common law only if: (a) the court's jurisdiction to give that judgment is recognised by New Zealand law; (b) the judgment is for a debt, or definite sum of money (but not a sum payable in respect of taxes or other charges of that nature, or in respect of a fine or other penalty); and

(see generally Dicey r 35, Cheshire & North at 516-551, Nygh at 807-820, Reeves v One World Challenge LLC [2006] 2 NZLR 184, Pawson v Claridge HC Auckland CIV-2009404-4367, 25 June 2010 and note the Court of Appeal summary in Von Wyl v Enge/er (1998) 12 PRNZ 187 (CA)). A judgment in rem of a foreign court may also be enforced by the New Zealand courts (see Dicey r 40 and Cheshire & North at 532-536). The enforcement of judgments in rem is of limited practical significance in commercial matters, and is not dealt with in this booklet. A judgment cannot be enforced at common law if it is a judgment to which Part I of the Reciprocal Enforcement of Judgments Act 1934 applies (s8): registration under that Act is the only means of enforcement permitted. 90 Jurisdiction of a foreign court

It is well established that, in order for a judgment to be enforceable in New Zealand, the court giving that judgment must have had jurisdiction over the defendant according to the New Zealand rules of private international law (Dicey at 568-570); Cheshire & North at 516-531; Adams v Cape Industries plc [1990] 2 WLR 657 at 731-732 (CA)); Jet Holdings Inc v Patel [1990] 1 QB 335; Pawson v Claridge HC Auckland CIV-2009-404-4367, 25 June 2010 at [30]). These rules are not the same as the rules which the New Zealand court applies in order to determine whether or not it has jurisdiction. A judgment given by a foreign court in circumstances in which the New Zealand court would itself exercise jurisdiction may not be enforced by the New Zealand court. One example is where a defendant is served with English proceedings outside the United Kingdom under the equivalent of our rr 6.27 and 6.28. 91 If the defendant has not agreed to submit to English 90 91

(d) if the judgment debtor, being a defendant in the original court, had before the commencement of the proceedings agreed, in respect of the subject matter of the proceedings, to submit to the jurisdiction of that court or of the courts of that country. 94 Each case is considered in detail in Dicey at 591-601. See also Cheshire & North at 516522, 526-527.

(c) the judgment is final and conclusive.

(b)

(c) if the judgment debtor, being a defendant in the foreign court, submitted to the jurisdiction of that court by voluntarily appearing in the proceedings; 93

For the operation ofs 8, see Gordon Pacific Developments v Conlon [1993] 3 NZLR 760. Formerly Order I I of the Rules of the Supreme Court; now Civil Procedure Rules 6.33 and 6.36.

58

The court which gave the judgment need not be a "superior court" or court of unlimited jurisdiction. A judgment of an inferior court can be enforced at common law. There is no need to register the judgment of the inferior court in a superior court of that country, where that is possible, and then use the procedure set out in the 1934 Act (see Moylan Assurance Consultants Pty Ltd v Hughes HC Auckland CP 951/89, 4 March 1991 at 3). This decision should be preferred to the dicta of Master Towle to the contrary in the earlier summary judgment application in that proceeding (Paul Joy Assurance Service Pty Ltd v Hughes HC Auckland CP 951 /89, 28 July 1989). (c)

Judgment for a debt, or definite sum of money

Only money judgments can be enforced at common law. The judgment must be for a definite sum of money, or one which can be calculated arithmetically (see Beatty v Beatty [1924] 1KB 807 (CA); Dicey at 576, Cheshire & North at 538-539). If interest is sought at the rate payable on the judgment under foreign law, a statement of the rate of interest on the face of a certificate of judgment is not sufficient evidence of the rate. Unless expert evidence of the basis on which interest is payable under the foreign law is provided, interest will be payable from the date of judgment at the Judicature Act rate (Moylan 92

93

94

See Dicey at 591-595 for a discussion of the case law as to whether residence rather than mere presence is required. An appeal or an application to set judgment aside other than on jurisdictional grounds may constitute a voluntary appearance in proceedings (SHC Corporation v O 'Brien (1991) 3 PRNZ 1 at 17) and see Dicey generally at 595599; Sirdar Gurdyal Singh v Rajah of Faridkote [1894] AC 670 (PC) at 684; and Wallace v Hastings (1899) 18 NZLR 639). Ses Pawson v Claridge HC Auckland CTV-2009-404-4367, 25 June 2010 for a discussion of the complexities surrounding this principle. The agreement must be express not implied (Gordon Pacific Developments Pty Ltd v Conlon [1993] 3 NZLR 760; ANZ Banking Group v Shankar (I 994) 8 PRNZ 242). The agreement may be by letter subsequent to the dispute arising, and may even be oral (ANZ Banking Group, SA Consortium General Textiles v Sun and Sand Agencies Ltd [1978] QB 279; [1978] 2 All ER 339 (CA)). Von Wyl v Enge/er (1998) 12 PRNZ 187 (CA) is an example of an allegation of submission to jurisdiction of the original court. Note the brief discussion of the issues arising from the limitations in the common law requirements for jurisdiction.

59

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

Assurance Consultants Pty Ltd v Hughes HC Auckland CP 951/89, 4 March 1991, Pickett v Pu/man (2004) 17 PRNZ 378).

The fact that some payments have been made towards satisfying the judgment, so that the amount sued for is not the full judgment debt, does not prevent the judgment being enforced as to the balance due. In Taylor v Begg [1932] NZLR 286, which might be interpreted as authority to the contrary, the better view is that enforcement of the judgment was refused because the amount shown on the face of the judgment was not the exact amount payable at the time the judgment was entered. If a foreign judgment has been wholly satisfied, that will provide a good defence to an action in New Zealand on the original cause of action as well as being a bar to all further proceedings on the judgment. 95

(e)

Judgment must be final and conclusive

A foreign judgment will be treated as final and conclusive if it is not liable to be abrogated or varied by the court which pronounced it. A foreign judgment may be final and conclusive: (a) even though it is a default judgment liable to be set aside in the court which rendered it (Barclays Bank Ltd v Piacun [1984] 2 Qd R 476, SHC Corporation v O'Brien (1991) 3 PRNZ 1 at p 17); (b) even though it is subject to an appeal, and even where an appeal is actually pending (Hunt v BP Exploration Company (Libya) Ltd [1980] 1 NZLR 104 (under the 1934 Act), Inada v Wilson Neill Ltd (1993) 7 PRNZ 246). (See generally Dicey at 577-578, and Cheshire & North at 531-539.)

(d)

Judgment not in respect of taxes, fines or penalty

Foreign revenue and penal laws are not enforced by New Zealand courts, and judgments giving effect to such laws also will not be enforced at common law (see Dicey at 576 and Cheshire & North at 126-127). The position in New Zealand in relation to punitive or exemplary damages, or multiple damages, is not clear. "Penalty" normally carries a connotation of a sum payable to the state, or a representative of the public, suggesting that a judgment for punitive damages or exemplary damages recovered by a plaintiff for his or her own benefit in a civil action should not be denied enforceability here (Huntington v Attrill [1893] AC 150, Schemmer v Property Resources Ltd [1975] 1 Ch 273 at 288, SA Consortium General Textiles v Sun & Sand Agencies Ltd [1978] QB 279 (CA) at 300). It is submitted that this approach is clearly appropriate in New Zealand, where there can be no policy objection to the recovery of punitive or exemplary damages, which are available as a civil remedy both at common law (Taylor v Beere [1982] 1 NZLR 87 (CA); Couch v Attorney-General (No 2) [2010] 3 NZLR 149) and under statute (for example the Commerce Act 1986 and the Securities Markets Act 1988).

(f)

Conclusiveness of foreign judgment in New Zealand

A foreign judgment which satisfies the criteria set out in section 5.2(a) above cannot be attacked by a defendant to an enforcement action in New Zealand on the grounds that the judgment was given as a result of an error of fact or of law (Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853). Even if the foreign judgment was given on the basis of an obvious mistake of New Zealand law, it cannot be re-examined on its merits (see Godard v Gray (1870) CR 6 QB 139 at 150 and Dicey at 616-619, Cheshire & North at 539-540). The defences open to a defendant are strictly limited: he or she can oppose enforcement only if: (a) the judgment was obtained by fraud on the part of the successful party, or the court; or (b) enforcement would be contrary to New Zealand's public policy; or (c) the proceedings in which the judgment was obtained did not comply with New Zealand conceptions of natural justice. See Kemp v Kemp [1996] 2 NZLR 454 (HC) at 458.

In Connor v Connor [1974] 1 NZLR 632, the Court held that enforcement of an order for

costs against a plaintiff in a proceeding in Victoria, for the benefit of the Victorian legal aid fund, was not precluded by this rule: the fact that a sum would become part of another state's general revenues did not mean it was a tax for these purposes. In Von Wyl v Enge/er HC Whangarei CP 11/96, 5 February 1997, a claim by the purchaser of property to recover capital gains tax owed by the vendor but paid by the purchaser, the Court distinguished Connor on the basis the claim under consideration was much more closely connected to enforcement of a revenue statute. 96 For a possible exception to this exclusion, when the New Zealand Government supports the foreign state's attempt to enforce a penal or public law, see Attorney-General for United Kingdom v Wellington Newspapers Ltd [1988] 1 NZLR 129 (HC and CA).

95 96

See Black v Yates [ I 992] QB 526 at 550 and 551; [ 1991] 4 All ER 722 at 740 and 741. This case went on appeal ( 1998) 12 PRNZ 187 (CA), but this issue was not discussed in the appellate judgment.

60

(g)

First defence: judgment obtained by fraud

A foreign judgment will not be enforced in New Zealand if it was obtained by fraud, for example, by the bribing of witnesses, or giving or procuring perjured or forged evidence (see generally Dicey r 43, Cheshire & North at 551-556). The question of fraud can be raised in enforcement proceedings even where it was alleged in the foreign proceedings (Abouloff v Oppenheimer (1882) 10 QBD 295 (CA), Jet Holdings Inc v Patel [1989] 2 All ER 648). This defence to some extent operates as an exception to the principle that foreign judgments are conclusive as to the merits. The explanation of the Court in Abouloff, that the issue whether the foreign court had been deliberately misled was not and could not be an issue dealt with by that court, is not entirely satisfactory. This defence will not be available where a foreign court has subsequently dealt with the very issue of whether the judgment was procured by fraud, on an application to set the judgment aside for fraud: the foreign court's judgment on that issue will give rise to an issue estoppel, if all the other requirements for recognition of the second judgment are 61

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

satisfied (House of Spring Gardens Ltdv Waite [1990] 3 WLR 347; [1990] 2 All ER 990 (CA)). In Gordhan v Kerdemelidis HC Christchurch CIV-2010-409-2982 20 December 2011 ' ' the High Court discussed the forms of fraud to which the defence applies: [31) ... Fraud may be analysed either as jurisdictional fraud in which the defendant alleges that it was precluded from presenting its case in the foreign Court by the deceit or false representations of the plaintiff. The second situation is perjury fraud, with that term used to connote a situation in which the foreign Court has been misled or deceived by the plaintiff in the conduct of its case, including through the presentation of purged [sic - presumably this should read "perjured"] or forged evidence.

In Svirskis v Gibson [1977] 2 NZLR 4, an appeal from refusal of an application to set aside registration of a Queensland judgment under the Reciprocal Enforcement of Judgments Act 1934, the Court of Appeal noted the extensive academic criticism of Aboulojf. However, the Court did not consider that the direction in s 6(1)(d) of that Act, to set aside registration of a judgment obtained by fraud, could be limited by "requiring new or newly discovered evidence as an essential condition of jurisdiction". On the other hand, the Court held that in exercising its discretion under r 23 of the Reciprocal Enforcement of Judgments Rules 1935 (now r 23.20(2) of the High Court Rules) whether to direct that the issue be tried, it could take into account all circumstances: ... including whether the defendant is merely seeking to try again on substantially the same evidence issues already adjudicated on in the overseas court.

Abouloffwas followed in SHC Corporation v O 'Brien (1991) 3 PRNZ 1, where the Court h~ld _t~at the allegations of fraud in question clearly had not been adjudicated on by the V1rg1ma courts at the time judgment was entered. Commonwealth courts have divided on the question of whether Abouloff remains good law today. The Australian position is unsettled. In New South Wales Rogers CJ declined to follow Abouloff in Keele v Findlay (1990) 21 NSWLR 444. Rogers CJ applied the same rule to forei~ judgme?ts as applies to domestic judgments impeached for fraud: the party assertmg that a Judgment was procured by fraud must show that there is new material not available at the trial, which is so material that its production at the trial would prob~bly have affected the result. However Abouloff has since been treated as good law in Australia, and applied by the Federal Court of Australia in Ki Won Yoon v Young Dung Song (2000) 158 FLR 295 (finding that Keele v Findlay was incorrectly decided) and by the Supreme Court of South Australia in Benefit Strategies Group v Prider [2005] SASC 194 (noting at [41] that despite the widespread criticism of the approach in Aboulojf, the reasoning in that decision had been accepted in decisions of single judges in Australia in McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529 at 533; Close v Arnot SC NSW BC9706194, 21 November 1997 : Ki Won. Yoon v _Young Dun~ Song [2000] NSWSC 1147; (2000) 158 FLR 295). The issue remams open m Australia. 7 The Su~reme ~o~rt of Canada has rejected the rule in Abouloff as regards fraud going to the ments, as d1stmct from fraud going to jurisdiction: Beals v Saldanha (2003) 234 DLR (4th) 1.

97

The House of Lords affirmed the approach in Abouloff in Owens Bank Ltd v Bracco [1992] 2 AC 443; [1992] 2 All ER 193. Lord Bridge of Harwich, with whom the other Law Lords concurred, referred to the criticism of the Abouloff approach by academic writers, and noted that the approach had not been followed by the Canadian courts (at 487). Lord Bridge recognised the force of the submission that the Abouloff approach should be overruled, on the grounds that it rests on a principle which is out of accord with the approach of the courts to other issues in the field of private international law. However the House of Lords concluded that s 9(2)(d) of the Administration of Justice Act 1920 (equivalent to New Zealand's s 6(1)(d) of the Reciprocal Enforcement of Judgments Act 1934, but limited to enforcement of judgments of courts in the Commonwealth) should be construed as having adopted the approach of the common law courts to the finality of a foreign judgment. Thus, there could be no requirement that the fraud defence be limited to situations where the fraud was established by fresh evidence not available to the defendant at trial and not able, with reasonable diligence, to have been discovered before judgment was delivered. If Abouloff was overruled by the courts, this would produce the absurd result that an overseas judgment creditor, denied statutory enforcement on the grounds that the judgment had been obtained by fraud, could succeed in a common law action to enforce the judgment. The House of Lords concluded that if the law is in need of reform, it must be done by legislation. However the English courts have indicated that they will seek to limit the application of the Abouloff approach. In Westacre Investments Inc v Jugo import SDPR Holding Co Ltd and others [1999] 3 All ER 864 at 879 (CA) the Court of Appeal indicated that the application of Abouloff is to be weakened wherever possible (using House of Spring Gardens Ltd v Waite [1990] 3 WLR 347; [1990] 2 All ER 990 (CA), discussed below, as an example). See also Owens Bank Ltd v Etoile Commerciale SA [1995) 1 WLR 44 at 50 (PC). The Privy Council recently declined to depart from Abouloff in AK Investment CJSC v Kyrgyz Mobil Tel Limited [2011] UKPC 7, an appeal from the Isle of Man. Lord Collins, delivering the advice of their Lordships, referred to the criticisms of Abouloff and said at [116]: These are powerful arguments, but the present case shows that, even if the rule in Abou/off were no longer to represent the law, simply to apply the English rules to foreign judgments might lead to real injustice. To decide, on an application to set aside service, an issue which requires "detailed argument and mature consideration" (American Cyanamid Co v Ethicon Ltd [1975] AC 396,407) would be an inappropriate application of the "bound to fail"/"serious issue to be tried" tests. Extremely important issues of policy would be involved in deciding whether to change a rule which has stood for almost 120 years. In particular the facts of this case shows (sic) that a nuanced approach might be required, depending on the reliability of the foreign legal system, the scope for challenge in the foreign court and the type of fraud alleged.

Much of the academic criticism of Abouloff seems justified: it is difficult to see why a foreign judgment alleged to have been obtained by fraud should be far more vulnerable to attack than either a domestic judgment procured by fraud, or a foreign judgment alleged to have been improperly given for some other reason such as a blatant error of law or fact. But the New Zealand courts have continued to treat Abouloff as authoritative, and are likely to continue to do so absent legislative reform. In Fawson v Claridge HC Auckland CIV-2009-404-4367, 25 June 2010 Associate Judge Sargisson observed at [56] that:

For further discussion see Nygh at 833.

62

63

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

disfiguring or not, the rule continues to apply ... . Aboulojf ... [has] been repeatedly upheld and cannot but be said to continue to represent the common law as it must be applied by this Court in New Zealand.

In the absence of more far-reaching legislative reform, an appropriate balance between the competing interests in this field may be found in the reasoning in House of Spring Gardens Ltd v Waite [1990] 3 WLR 347; [1990] 2 All ER 990 (CA). If the foreign court has in fact considered the very matter said to constitute the fraud which vitiates the judgment, or if the judgment debtor clearly ought to have raised the matter in the foreign court but failed to do so, the foreign judgment should not be open to attack in reliance on that matter in the absence of new material which would justify revisiting a domestic judgment. This would apply not only where there has been an application to set aside, as in House of Spring Gardens Ltd, but also where the complaint is that a witness was lying, and the foreign court decided the issue of credibility in the course of the substantive hearing. It is not enough for a person against whom a judgment is sought to be enforced to simply allege fraud in order for the court to inquire into it: there must be full particulars and plausible evidence disclosing at least a prima facie case, to prevent summary judgment being entered or the defence being struck out as frivolous and vexatious. See Owens Bank Ltd v Etoile Commerciale SA [ 1995] 1 WLR 44 (PC). (h)

Second defence: enforcement contrary to public policy

A foreign judgment will not be recognised or enforced in New Zealand if its recognition or enforcement would be contrary to New Zealand public policy ( Connor v Connor [1974] 1 NZLR 632, where Roper J concluded that enforcement of an order for costs, for the benefit of the Victoria legal aid fund, was not contrary to public policy). See also Dicey r 44. In Adams v Cape Industries pie [1990] 2 WLR 657 Scott J suggested (at 715) that this defence might overlap with the defence that a judgment was obtained in breach of natural justice. It is not contrary to New Zealand public policy to enforce a judgment merely because the cause of action on which the judgment was obtained is not known to New Zealand law: compare Phrantzes v Argenti [1960] 2 QB 19; Loucks v Standard Oil (1918) 120 NE 198 at 201 (Cardozo J), nor because exemplary damages have been awarded in circumstances in which they would not be available under New Zealand law (White v Verkouille [1990] 2 Qd R 191 at 197.

In Reeves v OneWorld Challenge [2006] 2 NZLR 184 at [67], O'Regan J discussed the scope of the public policy exception. The Judge emphasised that for the public policy defence to apply, the enforcement of the foreign judgment would need to shock the conscience of a reasonable New Zealander, be contrary to New Zealand's view of basic morality or a violation of essential principles of justice or moral interests in New Zealand. The Judge emphasised that the public policy exception is a narrow one that must be confined in line with the comity of nations principle. Accordingly, the mere fact that a case could have been approached differently under New Zealand law will not be a weighty enough factor to invoke the exception: at [56]. The Court of Appeal in Ross v Ross [2011] NZAR 30 at [28] again emphasised that the public policy exception is limited in scope and is to be narrowly approached. The Court 64

did, however, accept the submission that public policy considerations are wide enough to include both procedural and substantive matters. Public policy considerations have also been discussed by New Zealand courts in the context of applications to set aside registration of judgments under the Reciprocal Enforcement of Judgments Act 1934: see Bank of Kiribati Ltd v Harrison (1990) 3 PRNZ 111, Marine Services Ltd v Bolton (1992) 6 PRNZ 173; Dymock v Bilbie (1999) 13 PRNZ 158; Lane v Questnet Ltd [2010] NZAR 210. (i)

Third defence: breach of natural justice

The complaint that proceedings in a foreign court were not consistent with New Zealand views of natural justice is often based on the defendant not receiving sufficient notice of the foreign proceedings to enable him or her to defend them. However, the defence may be based on other aspects of the foreign procedure, such as denial to the defendant of a fair opportunity to present his or her case (for a recent discussion of the natural justice exception in the arbitration context see Hi-Gene Ltd v Swisher Hygiene Franchise Corp [2010] NZCA 359, [2010] NZSC 132).

Dicey suggests that agreement in advance to submit to a foreign jurisdiction precludes any complaint of insufficient notice, provided only that the notice is adequate under the procedural rules of that jurisdiction (at 635). It would follow from such a principle that, once sufficient initial notice of proceedings in a foreign jurisdiction had been given to a defendant, any step subsequently taken which was consistent with that jurisdiction's rules of procedure could not be the subject of complaint. However, this is subject to the proviso that the proceedings in the foreign court do not offend against New Zealand views of substantial justice. The fact that substantial justice was denied in accordance with the foreign court's rules of procedure should not compel a New Zealand court to ignore the injustice: prior agreement or submission is a relevant factor when determining whether or not there was an injustice, but it cannot be conclusive. This defence was successfully invoked in Adams v Cape Industries pie [1990] 2 WLR 657, where the English High Court and Court of Appeal concluded that the procedure used in the United States Federal Court to assess damages in that case, which resulted in an award of damages that was arbitrary and not based on evidence, resulted in substantial injustice. See also SHC Corporation v O'Brien (1991) 3 PRNZ 1 at pp 23 -26. In Jet Holdings v Patel [1989] 2 All ER 648 Staughton J suggested that this defence might also operate as an exception to the conclusiveness principle, and that a defendant could take a point going to natural justice although it had been (or might have been) taken before the foreign court. The Judge expressly disagreed with the proposition in Dicey that a defendant cannot, under this head, raise an objection that could have been and was taken before the foreign court. Neither of these extreme positions seems entirely satisfactory. It is suggested that the approach of the Court of Appeal in Adams v Cape Industries pie should be preferred98 : Since the ultimate question is whether there has been proof of substantial injustice caused by the proceedings, it would, in our opinion, be unrealistic in fact and incorrect in principle to ignore entirely the possibility of the correction of error within the procedure of a foreign court which itself provides fair procedural rules and a fair 98

(at 784, cited in SHC Corporation v O'Brien at 23).

65

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

opportunity for remedy. The court must, in our judgment, have regard to the availability of a remedy in deciding whether in the circumstances of any particular case substantial injustice has been proved. However, the relevance of the existence of the remedy and the weight to be attached to it must depend upon factors which include the nature of the procedural defect itself, the point in the proceedings at which it occurred and the knowledge and means of knowledge of the defendants of the defect and the reasonableness in the circumstances of requiring or expecting that they made use of the remedy in all the particular circumstances.

(j)

Recognition of foreign judgments

A party to proceedings which have been determined in a foreign court may find that the same claim, or a claim which raises some of the same issues, is then brought against him or her in New Zealand. A foreign judgment may give rise to a cause of action estoppel, where the foreign court has determined whether or not the cause of action should succeed. A plaintiff whose claim fails in a foreign court will not normally be entitled to relitigate the claim in New Zealand. A foreign judgment may also give rise to an issue estoppel, preventing a party from denying a matter of fact or law decided by the foreign court. A foreign judgment may be recognised as giving rise to an estoppel only if: (a) the foreign court had jurisdiction over the party sought to be estopped, in the sense considered in section 5.2(b) above; (b) the judgment is final and conclusive, in the sense considered in section 5.2(e) above; (c) the judgment is "on the merits" of the case. It is not settled how much, if anything, this adds to the requirement that the judgment be final and conclusive: see Dicey at 581. For a more detailed consideration of the circumstances in which a foreign judgment will give rise to cause of action estoppel or issue estoppel, see Dicey at 579-583; Cheshire & North at 544-551; The Sennar (No 2) [1985] 1 WLR 490; Carl Zeiss Stiftung v Raynor & Keeler Ltd (No 2) [1967] 1 AC 853; [1966] 2 All ER 536; Owens Bank Ltd v Bracco [1992] 2 AC 443 at 471 and 472; [1992] 2 All ER 193 at 201 and 203); Desert Sun Loan Corp v Hill [1996] 2 All ER 847 (CA) (in relation to a decision of a foreign court on a procedural issue giving rise to issue estoppel); Westcare Investments Inc v Jugoimport SDPR Holding Co Ltd [1999] 3 All ER 864; s 9 of the Reciprocal Enforcement of Judgments Act 1934; SHC Corporation v O'Brien (1991) 3 PRNZ 1 at 18 and 30; Tomita v Unnamed Vessel formerly known as ''Amami Taiki Go" HC Auckland AD36/00, 6 May 2003. A foreign judgment will not be recognised as giving rise to an estoppel in relation to an issue which it determines if the foreign judgment on that issue is irreconcilable with an earlier New Zealand judgment between the same parties (see Vervaeke v Smith [1983] 1 AC 145; [1982] 2 All ER 144; and ED & F Man (Sugar) Ltd v Haryanto (No 2) [1991] 1 Lloyd's Rep 429 (CA)). Where there are two conflicting foreign judgments as to the same matter, each of which would otherwise be entitled to recognition in New Zealand, the earlier in time prevails unless the party holding the earlier judgment is itself estopped from relying on it (see Showlag v Mansour [1995] 1 AC 431; [1994] 2 All ER 129 (PC)). The grounds discussed above on which enforcement of a foreign judgment can be opposed (fraud, contrary to public policy, contrary to natural justice) can be raised to oppose reliance on a foreign judgment as the basis for an estoppel. 66

(k)

Cause of action does not merge in foreign judgment

Under New Zealand law, a plaintiff who has obtained judgment in New Zealand in respect of a cause of action cannot sue the same defendant again on that cause of action, as the cause of action merges in the judgment. However this doctrine does not apply to foreign judgments. A plaintiff who has obtained judgment in a foreign court is still able to sue on the original cause of action, either instead of or in the alternative to suing on the foreign judgment (see Carl Zeiss Stiftung v Rayner & Keeler Ltd (No. 2) [1967] 1 AC 853 at 917, 927 and 938; [1960] 2 All ER 536; Delfino v Trevis (No 2) [1963] NSWR 194 at 196; (1961) 80 WN (NSW) 1248). This common law position has been altered in the United Kingdom. Section 34 of the Civil Jurisdiction and Judgments Act 1982 provides that proceedings between the same parties on the original cause of action are no longer available unless the foreign judgment is not enforceable or entitled to recognition: see the discussion in Black v Yates [1992] QB 526 at 542, [1991] 4 All ER 722 at 734. (I)

Procedure for enforcement

An action on a foreign judgment is an ordinary High Court proceeding, begun by statement of claim. The proceedings must be served on the defendant in the normal way: the principles discussed in section 4.2 above apply. The essential elements in an action on a foreign judgment, which should be pleaded in the statement of claim, are:

(a) that judgment for a definite sum of money was given by a foreign court against the defendant and in favour of the plaintiff; (b) the facts which establish that the foreign court had jurisdiction over the defendant in the sense discussed in section 5.2(b) above; (c) that the judgment is final and conclusive; (d) that the judgment has not been satisfied, or has not been satisfied in full. It will often be appropriate for a plaintiff to seek summary judgment in an action on a foreign judgment. Two affidavits in support of the application will normally be necessary: (a) an affidavit by or on behalf of the plaintiff, setting out briefly the circumstances in which judgment was obtained in the foreign court, annexing the judgment and any other documents relevant to establishing that the foreign court had jurisdiction, and setting out what payments (if any) have been made towards satisfying the judgment; (b) an affidavit from a practitioner in the foreign jurisdiction which sets out his or her qualifications to give evidence on the law of that jurisdiction, confinns that the judgment is a valid and binding judgment of the foreign court and that it is final and conclusive, and sets out the basis on which interest is payable on the judgment under foreign law (if such interest is sought: see section 5.2(c) above). In the normal course, an affidavit from the lawyer who acted for the plaintiff in the foreign court will be acceptable (SHC Corporation v O'Brien [1991] 3 PRNZ 1). Ifthere is a dispute as to the foreign law, it may be necessary to obtain confirming evidence from an independent lawyer of senior standing in the foreign jurisdiction by way of reply. The defendant to a summary judgment application in an action on a foreign judgment may oppose entry of judgment on the grounds that the judgment does not satisfy the criteria set out in section 5 .2(a) above, or on the grounds that one or more of the defences discussed in section 5.2(g)-(i) is available. 67

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

A bare denial by a defendant of the plaintiffs allegations as to foreign law is not likely be given much weight on a summary judgment application. Unless denials are supported by some evidence that the plaintiffs allegations are incorrect, they should not prevent summary judgment being given. A defendant wishing to oppose summary judgment on the grounds that the plaintiffs allegations as to foreign law are not accurate should provide evidence of the relevant foreign law in an affidavit from an appropriately qualified practitioner. Affidavits as to foreign law should set out the relevant rules and principles, and should annex relevant decisions or extracts from statutes and codes. Bare statements of conclusions as to the effect of foreign law in the case before the New Zealand court are unlikely to be accepted (Mount Cook (Northland) Ltd v Swedish Motors Ltd [1986] 1 NZLR 720; and Star/ink Navigation Ltd v The Ship "Seven Pioneer" HC Auckland CA124/01, 12 February 2001 at [12]; National Australia Bank Ltd v Mason HC Auckland CP 469/IM/00, 10 October 2002). An action on a foreign judgment may be brought in the alternative to an action on the

original cause of action: see section 5.2(k) above. In some cases it may be appropriate to seek summary judgment on both the foreign judgment and, in the alternative, the original cause of action, or to sue on both but seek summary judgment only on the cause of action based on the foreign judgment. Even if summary judgment is not sought, or is sought but is not granted and the claim proceeds as a normal action, it should normally be possible to deal with the relevant que~tions of_ ~oreign law by affidavit rather than incurring the expense of bringing a fore_1gn practit10ner to New Zealand. The relevant aspects of foreign law are usually quite straightforward, and proof of them mechanical, but the expense involved even in obtaining an affidavit may not be negligible. One possibility for a plaintiff is to use the notice to admit procedure (High Court Rule 8.47 99): if the relevant points of foreign law are not admitted, the defendant will normally bear the cost of proving them regardless of the outcome of the proceeding (r 8.47(4)). (m)

Limitation period for action on a foreign judgment

Under s 35(1) of the Limitation Act 2010, the limitation period that applies to an action to enforce a foreign judgment is six years from the date on which the judgment became enforceable in the country in which it was obtained. The. Co~rt has the ability to order that this limitation defence will not apply, on an application made before the defence has been established: s 35(5) and (6). The principles on which this discretion will be exercised are not prescribed by the Act. A similar discretion is conferred by s 50, albeit in a rather different context: case law on this provision may in the future provide some helpful guidance. The judgment creditor would presumably need to explain the delay in seeking to enforce the foreign judgment: if for example the judgment debtor had left the country in which judgment was entered to evade enforcement, and had been located many years later in New Zealand, that might justify an extension of time.

99

A six year limitation period applies to actions to enforce a foreign judgment obtained before 1 January 2011, when the Limitation Act 2010 came into force: see s 59 of the 2010 Act, and SHC Corporation v O'Brien (1991) 3 PRNZ 1, at 32. (n)

Judgment in foreign currency

It is now well established that a New Zealand court may give judgment in a foreign

currency, and it is relatively common practice to do so. The question of the currency in which judgment will be given is a complex one, which turns essentially on the currency in which the plaintiffs loss was effectively felt or borne: see Dicey r 237. The principles on which judgments can be given in foreign currency are set out in Miliangos v George Frank (Textiles) Ltd [1976] AC 443, [1975] 3 All ER 801; Isaac Naylor & Sons Ltd v NZ Cooperative Wool Marketing Association Ltd [1981] 1 NZLR 361 (CA) at 364-6; Mikac v Mikac (1979) 2 PRNZ, 489; Dicey r 242; and Cheshire & North at 102-109. For examples of New Zealand judgments given in a foreign currency, see American Express Europe Ltd v Bishop (1987) 1 PRNZ 635; Marinkovich v The Proceeds of Sale of The Ship "Gold Coast" HC Whangarei M 4/92 and M 122/94, 18 March 1997; Wei v Hu HC Auckland CIV-2006-404-2165, 5 March 2007; FXHT Fund Managers Ltd (in liquidation) v Oberholster (2009) 10 NZCLC 264,562. Judgment in a foreign currency was refused in Agronecon v White HC Rotorua Al 1/81, 31 July 1990. Where a foreign judgment has been entered in a foreign currency, a New Zealand court is likely to be willing to enter judgment in New Zealand in that currency. There would need to be exceptional reasons to decline to do so. In principle, where a New Zealand judgment is expressed in foreign currency, conversion

into New Zealand dollars will occur on the date of payment, if payment is made in New Zealand currency (see American Express; Marinkovich; Dicey r 242(2)). A judgment in a foreign currency may need to be converted into New Zealand currency before execution can issue in New Zealand. Conversion may not be necessary in the case of an asset (such as a foreign currency bank account with a New Zealand bank) denominated in the judgment currency.

5.3

Enforcement under statute: the Reciprocal Enforcement of Judgments Act 1934

(a)

The legislation

The Reciprocal Enforcement of Judgments Act 1934 ("the 1934 Act") is the principal New Zealand statute dealing with enforcement of foreign judgments. It corresponds to the Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK). Similar legislation is in force in many countries of the Commonwealth. New Zealand has no equivalent of the English Administration of Justice Act 1920 (the corresponding New Zealand Administration of Justice Act 1922 was repealed by the 1934 Act), or of the Civil Jurisdiction and Judgments Act 1982 (which deals with enforcement of judgments given in one United Kingdom jurisdiction in the other United Kingdom jurisdictions, and with

o·1stnct . Courts Rules 2009, r 3.64.1.

68

69

Goddard and Mclachlan • Enforcement of Foreign Judgments

NZLS CLE Seminar• Private International Law

the enforcement in the United Kingdom of judgments from other European Union member countries). The ~nglish Act of 1933 was enacted as a result of the Greer Report (Foreign Judgments (Reciprocal Enforcement) Committee 1932 (Cmnd 4213)). For a consideration of the relevance of this report, and the common law, in interpreting the English Act see Black Clawson International Ltd v Papierwerke Waldhof-Aschajfenburg AG [1975] AC 591; [1975] 1 All ER 810 and Hunt v BP Exploration Co (Libya) Ltd [1980] 1 NZLR 104. The ori?inal legislation enacted in 1934 provided for registration in the High Court of mon~y Judgments given in the superior courts of the United Kingdom and other countries specified ~y Order in Council. The Reciprocal Enforcement of Judgments Amendment Act 1990 mserted new provisions providing for the registration and enforcement in New Zealand of certain orders made by the Federal Court of Australia under the Trade Practices Act 1974 (Cth). The Reciprocal Enforcement of Judgments Amendment Act 1992 enables Orders in Council to be made extending the application of the Act to money judgments of inferior courts and to certain non-money judgments. For enforcement purposes, judgments registered under the 1934 Act have the same force and effect as a judgment of the High Court (s 4(2)). The 1934 Act essentially preserves the common law c~iteria for enforceability of foreign judgments, but simplifies the procedure by removmg the need to take proceedings in New Zealand. 100 It also removes the need to establish personal jurisdiction over the defendant in New Zealand before enforcing the foreign judgment, as no proceedings need to be served on the defendant (Hunt v BP Exploration Co (Libya) Ltd [1980] 1 NZLR 104). The procedure for applications to register foreign judgments under the 1934 Act and for applications to set registration aside, is set out in Part 23 of the High Court Rul:s which replaces the Reciprocal Enforcement of Judgments Rule 1935. '

(b) money judgments given in inferior courts of foreign countries specified in an Order in Council (currently various Australian courts. 102 Once again, on the commencement of the TTP A the 1934 Act will cease to apply to judgments from these Australian courts 103 given after that date); (c) non-money judgments given in superior and inferior courts of foreign countries. This limb has not come into operation as at June 2012, as no Order in Council has been made. It is unlikely that it will ever be brought into force.

Section 3(2A) confirms that the fact that a particular court is not specified in an Order in Council does not mean that it is not a superior court for the purposes of the Act. If a judgment creditor can prove that a court is in fact a superior court of a country to which the Act applies, that is sufficient, even though the court is not deemed to be one. This was the approach taken in Bank of Kiribati Ltd v Harrison (1990) 3 PRNZ 111, overriding the earlier contrary approach adopted in Belmont Finance Ltd v Fitzpatrick [1973] 2 NZLR 532 and Mikac v Mikac (1979) 2 PRNZ 489.

Reciprocity underpins the Act

In extending the application of the Act to an additional country, the Governor General must be satisfied that substantial reciprocity of treatment will be assured for the 104 enforcement of New Zealand's relevant judgments in that country. If a country is according substantially less favourable treatment to money judgments from New Zealand's superior courts than New Zealand accords to judgments from that country, an Order in Council can be made providing that money judgments from that country are unenforceable in New Zealand. ' 05 No Order in Council has ever been made under this provision.

!he Recipr?cal Enforcement of Judgments Act will cease to apply to Australian Judgments given after the date on which the TTP A comes into force. Judgment can include arbitral award

(b)

Which judgments can be registered under Part I of the 1934 Act?

Part I of the 1934 Act provides for registration of: (a) money judgments given in superior courts of foreign countries to which the Part applies (being the United Kingdom and other countries to which the Act has been extended by Order in Council, a list of which is contained in Appendix 2. The Act will cease to apply to judgments of Australian courts with effect from the commencement of the TTPA); 101

100

101

With the introduction of the summary judgment procedure, the procedural advantages of the registration procedure became far less s1gmficant. However, s 8 o'. the Reciprocal Enforcement of Judgments Act 1934 prohibits enforcement of Judgments to which the Act applies other than under the Act, so this is not a question of choice. Reciprocal Enforcement of Judgments Act 1934, s 3. The provisions of Part I of the Reciprocal Enforcement of Judgme~ts Act 19_34 al~o apply to any judgment, given by a Court in a country in respect of which the International Con_v_ent1on on C1vtl L1ab1ltty for Otl Pollution Damage 1969 is in force, to enforce certain claims in respect of ltab,ltty for discharge of harmful substances or waste (s 369 of the Maritime Transport Act 1994). Further, those prov,s10ns of the 1934 Act apply also to any judgment given by a court against the International Oil Pollution Fund ma country where_ th_e International Convention on the Establishment of an International Fund for Compensation for Otl Damage 1971 1_s m force (s 382 of the Maritime Transport Act 1994). Subsections (3) and (4) ofs 6 of the 1934 Act have no effect m the case of any such judgment.

70

"Judgment" is defined in s 2 to include an award in proceedings on an arbitration (not being an award made outside New Zealand within the meaning of the Arbitration Act 1996) if the award has, in pursuance of the law in force in the place where it was made, become enforceable in the same manner as a judgment given by a court in that place.

Certain Australian court orders deemed money judgments

Certain orders made by an Australian court under the Evidence and Procedure (NZ) Act 1994 (Cth) are deemed to be money judgments for the purposes of the 1934 Act. This applies to orders for the payment of expenses incurred by a witness in complying with an Australian subpoena served on the witness in New Zealand, and also to orders for the payment of expenses associated with the taking of evidence or the making of submissions from New Zealand by video link or telephone. 102 103

104

'

05

For details see Reciprocal Enforcement of Judgments (Australian Inferior Courts) Order 1992 (SR 1992/265). Reciprocal Enforcement of Judgments Act 1934, s 3A. Reciprocal Enforcement of Judgments Act 1934, ss 3(2), 3A(l) and 38( I). Section I 0.

71

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

As noted above, the Reciprocal Enforcement of Judgments Act 1934 will cease to apply to Australian judgments given after the date on which the TTPA comes into force.

v BP Exploration Co (Libya) Ltd [1980] 1 NZLR 104). Note the broad definition of appeal ins 2(1).

Requirements for a money judgment to be registered

An "interim" money judgment which represents the minimum amount payable will be treated as a "final and conclusive" judgment (see Re Perkins HC Whangarei CIV-2010488-375, 25 August 2010).

In order to be registered by the High Court, a money judgment must: (a) be final and conclusive as between the parties (ss 3(3)(a) and 3A(2)(a)); and

The principles discussed in section 5.2(e) above are applicable under the 1934 Act, as well as at common law.

(b) be for a sum of money, not being a sum payable in respect of taxes or other changes of a like nature or in respect of a fine or other penalty (ss 3(3)(b) and 3A(2)(b)); 106 and (c) be capable of being enforced by execution in the country in which it was given (s 4(1)(b)); and

Judgment for a sum of money other than taxes, fine or penalty

(f) if an inferior court judgment) have been given after the coming into operation of the Order in Council directing that that court is a specified inferior court for the purposes of Part I of the Act, unless it is a judgment of an inferior court of Australia. 107

The common law principles discussed in sections 5.2(c) and (d) above apply. The definition of "judgment" in s 2 of the 1934 Act includes a judgment or order given or made by a court in any criminal proceeding for the payment of a sum of money in respect of compensation or damages to an injured party, clearly excluding such orders from the category of "penalties". An order for costs is within the definition of a judgment (Baker & McKenzie v Currie as Official Assignee and Liquidator of Springfield Acres Ltd (in liquidation) HC Hamilton CP 33/98, 15 March 1998). The exclusion of taxes does not apply to judgments for an Australian tax (s 3(3A) ands 3A(3)).

Requirements for a non-money judgment to be registered

Capable of being enforced in original court

In order to be registered by the High Court, a non-money judgment to which the Act applies must meet the criteria set out ins 3B(4) and (5), ands 4(1)(a) and (b).

All that must be established is theoretical enforceability - the fact that enforcement proceedings would be ineffective because the judgment debtor did not reside in the country in which the judgment was made is irrelevant (Royal Tongan Airlines Company Ltd v Hori HC Auckland Ml 823/97, 17 August 1998).

(d) not have been wholly satisfied (s 4(1)(a)); and (e) (if a superior court judgment) be a judgment given after the coming into operation of the Order in Council extending Part I of the Act to the country in question; or

As noted above, in the absence of any Order in Council in respect of non-money judgments, Part I of the Act does not operate in respect of such judgments. It now seems most unlikely that it ever will. In particular, it has been overtaken so far as Australian judgments are concerned by the TTP A.

Parts of foreign judgment may be registered

Where a foreign judgment relates to more than one matter, and one part would have been registrable if contained in a separate judgment, that part may be registered even if the remainder of the judgment is not registrable (s 4(5) and HCR r 23.13).

Final and conclusive

A judgment is deemed to be final and conclusive although an appeal is pending against it, or it is still subject to appeal, in the courts of the country in which it was given (ss 3(4) and 3A(5)). In these circumstances, however, the court may set aside registration or adjourn an application to set aside registration, effectively staying enforcement (see Hunt

106

107

(c)

Part IA - Orders of Federal Court of Australia under Trade Practices Act 1974 (Cth)

The Reciprocal Enforcement of Judgments Amendment Act 1990 inserted a new Part IA into the 1934 Act. Part IA provided for the registration and enforcement in New Zealand of orders made by the Federal Court of Australia in proceedings under ss 46A, 155A and 155B of the Trade Practices Act 1974 (Cth), which correspond toss 36A, 98H and 99A of the Commerce Act 1986. The orders which can be registered are not restricted to money judgments. The court has no discretion to refuse registration if the criteria in s 8D are met, although registration can be set aside in limited circumstances (s 8E) or stayed (s 8G). The normal rules of private international law do not apply (s 8H). Registration cannot be challenged on the grounds that the Federal Court lacked jurisdiction, that the judgment was procured by fraud, or for reasons of public policy (s 8H). Part IA of the Act will be repealed with effect from the date on which the TTP A comes into force: it is replaced by subpart 6 of Part 2 of the TTP A.

Th. . . 1s reqmrement does not apply to judgments for Australian tax (ss 3(3A) and 3A(3)). As noted above, the 1934 Act will not apply to Australian judgments given after the date on which the TTPA comes into force. Australian tax judgments given after that date will be enforceable under the TTPA. Section 3A(2)(c) and (4)

72

73

NZLS CLE Seminar • Private International Law

(d)

Goddard and Mclachlan • Enforcement of Foreign Judgments

Applications for registration

(b) that the judgment has not been satisfied or that it has been satisfied in part, specifying the balance remaining payable or other action required to be taken to satisfy the judgment, as the case may be, at the date of the application (r 23.1 l(l)(b), (c));

Application to be made within six years

An application for registration under the Act may be made at any time within six years after the date of judgment (being the date of the last judgment given, where there has been one or more appeals) (s 4(1)).

(c) that at the date of the application the judgment can be enforced in the country of the original court (r 23 .11 (1 )(d));

Procedure for applications

(e) the full name, title, trade, or business, and the usual or last-known place of abode or place of business of the judgment creditor and of the judgment debtor (r 23 .1 l(l)(f));

Part 23 of the High Court Rules sets out the procedure for applications for registration of 108 foreign judgments under the 1934 Act. An application for registration must be made by originating application in form G30 (rr 19.2(u) and 23.4). If the application is made without notice as contemplated by r 23 .4(2), which is the normal practice, it must be certified as correct by the solicitor or counsel acting: those signing the application must satisfy themselves that the application complies with the rules, and that the judgment ought to be registered (rr 23.4(2), 7.23). Rule 23.5 sets out a number of very specific requirements in relation to the intituling of an application for registration. Although most applications for registration are made without notice, they may be made on notice, giving the judgment debtor the opportunity to oppose. Where this occurs, the court will hear the matter as if the judgment had previously been ordered to be registered and this were an application to set aside the registration (Dymock v Bilbie (1999) 13 PRNZ 158). 109 An application for registration must be filed in the office of the court where the defendant would have been required to file its defence, had the proceeding been commenced by way of proceeding on the foreign judgment (r 23.6). The court has the power to order the judgment creditor to give security for costs (r 23.14).

An application for registration must be supported by one or more affidavits (r 23.7). The affidavits must exhibit the foreign judgment, or an appropriately authenticated copy of it (r 23.8(1)). If the judgment is not in English, an affidavit from a properly qualified 110 translator exhibiting a translation of the judgment into English is required (r 23.8(2) and (3)). In addition, an affidavit must state:

(a) that the applicant is entitled to enforce the judgment (r 23.ll(l)(a));

108

110

(f) the costs of and incidental to the application for registration (s 4(6) of the Act). Where the judgment is a money judgment, the following additional matters must be addressed in an affidavit: (g) where the application does not state that the judgment is to be registered in the currency in which it is expressed (r 23.lO(a), (b) and (c)(i)): (i)

(ii) (iii) (iv)

Note that the High Court Rules generally apply, except insofar as they are modified or inconsistent with Part 23 High Court Rule 23.2. The Court relied on McCormack v Gardner [ 1937] NZLR 517 and Sharps Commercials Limited v Gas Turbines Ltd [1956] NZLR 819, overriding the decision of a Master in United Machinery Services Pye Ltd v Edwards Bros Construction (Hawkes Bay) Ltd (1995) 9 PRNZ 228. Clyde & Co v Sovrybflot Commercial Corporation ( 1998) 12 PRNZ I is another example of s 6 issues being dealt with by way of opposition to an app lication for registration . Note that Royal Tongan Airlines Co Ltd v Huri HC Auckland M 1823/97, 17 August 1998, Morris J accepts (without discussing it) that a judgment debtor may first oppose an application for registration, and second apply to set such registration aside. Th. . fi IS 1s not a de med terrn. The Department of Internal Affairs offers a translation service, but other commercial translation services would also be appropriate.

74

the rate of exchange prevailing on the day of the application between New Zealand currency and the currency in which the sum payable under the judgment is expressed; and the amount which the sum payable under the judgment represents in New Zealand currency calculated at that rate; the rate of interest (if any) carried by the judgment by the law of the country in which it was given; the amount of interest which, by the law of the original court, will have become due, expressed in New Zealand currency calculated at the rate of exchange earlier specified;

(h) where the application states that the judgment creditor wishes the judgment to be registered in the currency in which it is expressed (r 23 .lO(b) and (c)(ii)): (ii)

Evidence in support

109

(d) that if the judgment is registered, the registration would not be set aside or be liable to be set aside under s 6 of the Act (r 23.1 l(l)(e));

(ii)

the rate of interest (if any) carried by the judgment by the law of the country in which it was given; the amount of interest which, by the law of the original court, will have become due, expressed in the foreign currency;

Further evidence may be needed to satisfy the requirements of particular Orders in Council made under the Act (r 23.12). Rule 23 .21 provides that questions as to whether a foreign judgment can be enforced in the country of the original court or as to what interest is payable under any judgment under the law of that country are to be determined in accordance with any relevant provisions in an Order in Council. Rule 23.11 requires each affidavit to specify the source of the deponent's information and the grounds for their belief. While this rule only applies to items (a) to (e) above, the requirement is equally relevant to the other items as a matter of general principle. A number of affidavits would be required if the rules of evidence were strictly applied to these applications. In addition to a general affidavit by or on behalf of the applicant, dealing with items (a), (b), (d) and (e), one would need an affidavit from a suitably qualified expert on the appropriate rates of exchange for the nature and size of the transaction (items (g)(i) and (ii)) and from a suitably qualified lawyer in the foreign jurisdiction (items (c) and (g)(iii) and (iv), (h)(i) and (ii)). In practice, it is usually acceptable in a straightforward case for the applicant's affidavit to have annexed letters 75

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

from a bank as to the relevant exchange rate, and from a lawyer dealing with items (c) and (g)(iii) and (iv), and (h)(i) and (ii). Item (g)(ii) is a simple calculation which can be set out in the applicant's affidavit. If an applicant for registration does not provide adequate proof of the interest payable under the foreign law, it appears from s 4(6) that no interest will be awarded.

If satisfied, the court must order judgment to be registered.

Once a properly completed application for registration has been filed in court, the court is required to order that the judgment be registered if it is satisfied that the prescribed 111 matters have been adequately proved. The order will specify the period which the judgment debtor has to apply to set registration aside from the time notice of registration is served (r 23.15(1)(a)). That period will normally be the same as for filing a statement of defence: that is, 25 working days from service if the judgment debtor is in New Zealand, and 30 working days from service on the judgment debtor outside New Zealand (r 23.15(2)). Irrespective of this time period, however, the court may extend the time for filing an application to set aside (r 23.15(3). The court will consider whether failure to grant an extension could lead to a miscarriage of justice (Saunders v Saunders (1994) 7 PRNZ413).

{f)

A judgment debtor may apply by interlocutory application (r 23.20(1)) to set aside registration of a foreign judgment. If necessary, the court may direct that an issue be tried in order to determine the application (r 23.20(2)). 112 Nothing in the rules appears to prevent an application being filed after the expiry of the notice period prescribed in r 23.15(1)(a), although a judgment debtor who permits the period to expire without taking any steps runs the risk that execution will take place.' 13 An application to set aside registration will automatically stay execution on the registered judgment until the application has been determined (r 23.22(1)(c)). 114 Sections 6 and 7 of the 1934 Act set out the circumstances in which registration of a judgment may be set aside. 6 Cases in which registered judgments must, or may, be set aside (1) On an application in that behalf duly made by any party against whom a registered judgment may be enforced, the registration of the judgment shall be set aside if the High Court is satisfied (a) That the judgment is not a judgment to which this Part of this Act applies or was registered in contravention of the foregoing provisions of this Act; or (b) That the Courts of the country of the original Court had no jurisdiction in the circumstances of the case; or

Notice of registration must be served personally on the judgment debtor, unless the court directs otherwise. Leave is not required to serve the notice out of New Zealand (r 23.18). The contents of the notice are prescribed by r 23 .19.

{e)

(c) That the judgment debtor, being the defendant in the proceedings in the original Court, did not (notwithstanding that process may have been duly served on him in accordance with the law of the country of the original Court) receive notice of those proceedings in sufficient time to enable him to defend the proceedings and did not appear; or

Effect of registration

(d) That the judgment was obtained by fraud; or (e) That the enforcement of the judgment, not being a judgment of a superior Court or an inferior Court of Australia under which Australian tax is payable, would be contrary to public policy in New Zealand; or

A judgment registered under Part I of the 1934 Act has, for the purposes of enforcement, the same force and effect, and the High Court the same control over its enforcement, as if the judgment had been originally given in the High Court on the date of registration (s 4(2)(a) and (d)). Proceedings may be taken on a registered judgment, and the judgment sum carries interest, as if the judgment were an original judgment of the High Court (s 4(2)(b) and (c)).

(f) That the rights under the judgment are not vested in the person by whom the application for registration was made. (2) On an application in that behalf duly made by any party against whom a registered judgment may be enforced, the registration of the judgment may be set aside if the High Court is satisfied that the matter in dispute in the proceedings in the original Court had previously to the date of the judgment in the original Court been the subject of a final and conclusive judgment by a Court having jurisdiction in the matter.

A judgment that has been registered will not be enforceable in New Zealand until notice of registration has been served on the judgment debtor, and either the time for applying to set aside registration has elapsed without any application being made, or any application made has been disposed of (rr 23.15(1)(b), 23.22). See for example, Hunt v BP Exploration Co (Libya) Ltd (1980] 1 NZLR 104. Before execution of a registered judgment will be permitted, an affidavit of service of the notice of registration must be filed (r 23.22(2)). In addition, enforcement may only take place to the extent that (at the time proceedings are taken) the judgment is capable of being enforced in the country of the original court (s 4(2A)).

(3) For the purposes of this section the Courts of the country of the original Court shall, subject to the provisions of subsection (4) of this section, be deemed to have had jurisdiction 112

If certain execution processes are issued on a registered foreign judgment, they must describe the relief granted in accordance with the requirements set out in r 23.23. 113 114 Ill

Applications to set registration aside

S . ect10n 4( I) of the 1934 Act

76

See for example Bank of Kiribati Ltd v Harrison (1990) 3 PRNZ 111, where one issue was subject to such a direction, while the judge felt able to dispose of the other arguments during the hearing of the interlocutory application. Note Richards v Cogswell (I 995) 8 PRNZ 383, where Barker J held that, in a clear case, where there does not seem to be any major conflict of evidence, there is no need to use the rule 23.20(2) process. Rather, the Court can simply order that the registration of the foreign judgment be set aside. A direction was also refused in OFEMA v Airwork NZ (Ltd) [1996] 9 PRNZ 690. See also Svirskis v Gibson [1977] 2 NZLR 4 (CA) for its consideration of the use of the precursor of r 23.20 (2), r 23(2) of the Reciprocal Enforcement of Judgments Rules 1935. See Saunders v Saunders ( 1994) 7 PRNZ 413 Although note PG Nominees Ltd v Bell ( 1985) 2 PRNZ 497 where (under the previous Reciprocal Enforcement of Judgments Rules 1935) the Court struck out an application for setting registration aside, given the circumstances of inordinate delay.

77

Goddard and Mclachlan • Enforcement of Foreign Judgments

NZLS CLE Seminar• Private International Law

application for registration enforceable in the country of the original Court, the setting aside of the registration shall not prejudice a further application to register the judgment when the appeal has been disposed of or if and when the judgment becomes enforceable ... in that country, as the case may be.

(a) In the case of a judgment given in an action inter partes (i)

If the judgment debtor, being a defendant in the original Court, submitted to the jurisdiction of that Court by voluntarily appearing in the proceedings otherwise than for the purpose of protecting, or obtaining the release of, property seized, or threatened with seizure, in the proceedings or of contesting the jurisdiction of that Court; or

(ii)

If the judgment debtor was plaintiff in, or counterclaimed in, the proceedings in the original Court; or

(iii)

If the judgment debtor, being a defendant in the original Court, had before the commencement of the proceedings agreed, in respect of the subject-matter of the proceedings, to submit to the jurisdiction of that Court or of the Courts of the country of that Court; or

(iv)

(v)

(vi)

If the judgment debtor, being a defendant in the original Court, was at the time when the proceedings were instituted resident in, or being a body corporate bad its principal place of business in, the country of that Court; or

(3) Where the registration of a judgment is set aside solely for the reason that the judgment, notwithstanding that it had at the date of the application for registration been partly satisfied, was registered for the whole sum payable thereunder, the High Court shall, on the application of the judgment creditor, order judgment to be registered for the balance remaining payable at that date.

There is a useful discussion of the corresponding provisions in the Australian State legislation in Nygh pp 848-850, and of the English provisions in Dicey at 638-648. Relevant New Zealand authorities are discussed below.

Section 6(1 )(a): Registration in contravention of Act

If the judgment debtor, being a defendant in the original Court, had an office or place of business in the country of that Court and the proceedings in that Court were in respect of a transaction effected through or at that office or place;

If registration of a judgment is set aside solely because it was not at the date of the application for registration enforceable in the country of the original court, a further application may be made at a later date if that position alters (s 7(2)).

If Australian tax is payable under the judgment.

In Fairmount Trustee Services Ltd v Robinson [2012] NZHC 687, the applicant had applied to register a judgment given in the Staines County Court against the respondent, when it should have applied for the registration of a judgment subsequently obtained in the High Court of Justice Queens Bench Division. Registration of the judgment was set aside under s 6(1 )( a).

(b) In the case of a judgment given in an action of which the subject-matter was immovable property or in an action in rem of which the subject-matter was movable property, if the property in question was at the time of the proceedings in the original Court situate in the country of that Court: (c) In the case of a judgment given in an action other than any such action as is mentioned in paragraph (a) or paragraph (b) of this subsection, if the jurisdiction of the original Court is recognised by the law of the registering Court. (4) Notwithstanding anything in subsection (3) of this section, the Courts of the country of the original Court shall not be deemed to have had jurisdiction (a) If the subject-matter of the proceedings was immovable property outside the country of the original Court; or (b) Except in the cases mentioned in subparagraphs (i), (ii), and (iii) of paragraph (a) and in paragraph (c) of subsection (3) of this section, if the bringing of the proceedings in the original Court was contrary to an agreement under which the dispute in question was to be settled otherwise than by proceedings in the Courts of the country of that Court; or (c) If the judgment debtor, being a defendant in the original proceedings, was a person who under the rules of public international law was entitled to immunity from the jurisdiction of the Courts of the country of the original Court and did not submit to the jurisdiction of that Court. 7 Powers of High Court on application to set aside registration -

(1) If, on an application to set aside the registration of a judgment, the applicant satisfies the High Court either that an appeal is pending, or that he is entitled and intends to appeal against the judgment, the Court, if it thinks fit, may, on such terms as it may think just, either set aside the registration or adjourn the application to set aside the registration until after the expiration of such period as appears to the High Court to be reasonably sufficient to enable the applicant to take the necessary steps to have the appeal disposed ofby a competent tribunal. (2) Where the registration of a judgment is set aside under the last preceding subsection, or solely for the reason that the judgment was not at the date of the

78

If registration is set aside solely because the judgment was registered for the whole of the sum payable under it, when it had been partly satisfied at the date of the application for registration, the court must, on the judgment creditor's application, order the judgment to be registered for the remaining balance payable (s 7(3)). In Ho Wah Gentry International Ltd v Kasuya (1998) 13 PRNZ 19, 115 the Court held that setting aside the judgment in these circumstances was not required. The Court (by reference to the predecessor of High Court Rule 1.6) rectified the error to record the correct amount.

Section 6(1 )(b ): Jurisdiction

The common law concept of jurisdiction is replaced in the Act with a statutory prescription of the jurisdiction of a foreign court, set out ins 6(3) and (4). The heads of jurisdiction in s 6(3) are exclusive (Sharps Commercials Ltd v Gas Turbines Ltd [1956] NZLR 819, Gordon Pacific Developments Pty Ltd v Conlon [1993] 3 NZLR 760, Re Morgan ex parte Brierley Holdings Ltd HC Auckland CIV-2008-404-3725, 1 September 2009). 116 In Re Morgan ex parte Brierley Holdings Ltd at [44], Heath J expressed concern about the exclusive nature of s 6(3), especially with regard to the increase in trade between Australia and New Zealand. However the Judge noted at [45] that his concerns were assuaged by the Trans-Tasman Agreement between Australia and New Zealand, to be given effect by the TTP A.

11 5

11 6

Note that the Court of Appeal considered this matter briefly in Kasuya v Ho Wah Genting International Ltd CA 253/99, 23 March 2000, in relation to Ho Wah's application to strike out Kasuya ' s appeal. For the distinction between actions inter par/es to which section 6(3)(a) applies, and actions the subject matter of which is immovable property (s 6(3)(b )), see McCormac v Gardner [ 1937] NZLR 517.

79

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

The common law and statutory bases of jurisdiction are similar, but not identical (see Dicey at 570-573).

•

•

Secti~n 6(3)(a)(i): What constitutes an appearance in proceedings is a complex question_: see Clyde & Co v Sovrybflot Commercial Corp (1998) 12 PRNZ 1; and SA Consortzon General Textiles v Sun and Sand Agencies Ltd [1978] QB 279· [1978] 2 All ER 339 (CA). ' Section 6(3)(a)(iii): The agreement to submit to the court's jurisdiction must be express and cannot be implied (see Gordon Pacific Developments Pty Ltd v Conlon [1993] 3 NZLR 760 at 767; and Australia and New Zealand Banking Group v Shankar (1994) 8 PRNZ 242). The choice of a specified court or courts in a "law area" is not an ~greement to submit to the jurisdiction of other courts in the same "law area". For mstance, a choice ?f German law to govern the contract and a provision for the courts of only one stat~ m Germany to have jurisdiction cannot be interpreted as meaning that other courts m Germany can hear disputes under the contract: Elmar Hertzog und Partner Management Consultants GmbH v Perlich HC Whangarei CIV-2011-488185, 23 September 2011.

•

Se~tion 6(3)(a)~iv): Cjtizenship of New Zealand does not fall within the scope of residence to satisfy this category (see Elders Securities Ltd v Mullen (1990) 4 PRNZ 440).

•

~ection 6(3)(b): As o~tlined in McGechan on Procedure (online ed) at RJ6.09, a jud_gment for ~ sum owmg for the purchase price of land is not a judgment given in an act10n the subject-matter of which is immovable property; it is an action in personam for debt: McCormac v Gardner [ 193 7] NZLR 517. Similarly, a claim for damages for bre_ach of con~act for the sale of land following cancellation of the contract is not an act10n the subject-matter of which is immovable property; the subject-matter is the contract for sale and purchase: Gordon Pacific Developments Pty Ltd (in liq) v Conlon [1993_] 3 NZLR 7?0. In that case Henry J said thats 6(3)(b) is confined in its operation to act10ns where title to or possession of property is at issue, and left open the question o~ w_hether a c~aim for specific performance of a contract to purchase land would be w1thm the ambit of s 6(3)(b). Ludgater Holdings Ltd v Gerling Australia Insurance Co Pty Ltd [2010] 3 NZLR 713 at [26] briefly discusses this provision.

Section 6(1 )(c): Adequate notice

In _Bank of Kiribatt Ltd v Harrison (1990) 3 PRNZ 111, there was conflicting affidavit ~v1dence as to service of the foreign proceedings. The judge was not able to determine the issue on the affidavits. The judge directed that the issue be determined under the p~edecessor of r 23.20(2) and adjourned the application to set aside registration until the issue had been determined. In Office Francais D 'exportation de Materiel Aeronautique v Airwork (NZ) Ltd (1996) 9 PRNZ 690, the Court concluded that the doc~ents re~eived by the judgment debtor (primarily in French) were insufficient to ~onstttute ~ottce of the proceedings under s 6(1)(c). The Court refused to direct that the is~ue be tried pursuant ~o the prede_cessor ?fr 23.20(2) (the question had been clearly raised, and would have mvolved gomg behmd the finding of the French court as to the docume~ts served). There was at least an implicit criticism of the judgment creditor for n?t seeking to cross-examine the judgment debtor's representative to resolve the factual dispute over what information was actually received.

The "notice" referred to ins 6(1)(c) is notice of the institution of the proceedings, and not of any subsequent steps such as interlocutory applications or setting down for trial: Marine Services Ltd v Bolton (1992) 6 PRNZ 173; Lane v Questnet Ltd [2010] NZAR 210.117 Once notice of the institution of proceedings has been given in sufficient time for the defendant to be able to take steps to defend the proceedings, questions of notice of subsequent steps should normally be a matter for the foreign court. If there has been a serious breach of natural justice, registration could be set aside under s 6( 1)(e) (see the comments of Scott J on the overlap between public policy and natural justice in Adams v Cape Industries pie [1990] 2 WLR 657, 715).

Section 6(1 )(d): Fraud

Section 6(1)(d) has been considered by the Court of Appeal in Svirskis v Gibson [1977] 2 NZLR 4, and by the High Court in James Meikle Pty Ltd v Noakes, Richards v Cogswell (1995) 8 PRNZ 383 and Dymock v Bilbie (1999) 13 PRNZ 158 and Pawson v Claridge HC Auckland CIV-2009-404-4637, 25 June 2010. In Pawson v Claridge the Court expressed the view that the defence of fraud to an action on a foreign judgment at common law is identical to the defence of fraud by which a judgment registered pursuant to the Reciprocal Enforcement of Judgments Act 1934 may be set aside under s 6(1)(d) of that Act, noting that this was the approach taken in England under its corresponding legislation. However the Court observed that this does not mean that the thresholds at which a Court will treat a defence of fraud as requiring further inquiry may not vary between the two. Under the Act, the defendant need not show a prima facie case of fraud: if in all the circumstances the court is uneasy, and considers there may have been some fraud, it may in its discretion direct that the issue be tried under r 23.20(2). The Court was more doubtful as to whether a "feeling of uneasiness" would be sufficient to ground an arguable defence for the purpose of resisting summary judgment in an action on a foreign judgment at common law. It is not easy to see why the threshold for a further hearing should be different in these two contexts: if there is a real possibility that a judgment was obtained by fraud, that should be investigated in a further hearing in either context; if not, then nothing is to be gained from a further hearing in either context.

While new or newly discovered evidence of fraud is not essential, 118 in exercising its discretion under r 23.20(2) the court is entitled to have regard to whether the defendant is merely seeking to try again, on substantially the same evidence, issues already adjudicated on in the foreign court, and whether the defendant deliberately refrained from appearing in the foreign court despite adequate notice of the nature of the evidence likely 117

118

80

The contrary view was expressed in James Meikle Pty Ltd v Noakes HC Auckland A823/80, 28 July 1983, where the Court proceeded on the basis thats 6(1)(c) also required the New Zealand court to consider whether the defendant was given adequate notice of the hearing date for the proceeding (even though the defendant had previously appeared and taken steps in the proceeding), and in Saunders v Saunders ( 1994) 7 PRNZ 413, in which the Court assumed that if the judgment to be enforced is an order for costs, it is the application for costs of which sufficient notice must have been given. However the better view is that these decisions are wrong, and should not be followed: Marine Services; Lane v Questnet [20 I OJ NZAR 210. See Owens Bank Ltd v Bracco [1992] 2 AC 443; [1992] 2 All ER 193 (decided under comparable provisions of the Administration of Justice Act 1920 (UK)), and Owens Bank Ltd v Etoile Commerciale SA [1995] I WLR 44 (PC) 49, 50 (obiter).

81

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

~o be ~iven by the plaintiff (Svirskis v Gibson [1977] 2 NZLR 4 at 10). See the discussion m section 5.2(g) above generally.

Section 7: Appeal in the foreign jurisdiction

"Appeal" is defined in s 2(1) to include any proceeding by way of discharging or setting aside a judgment, or an application for a new trial or a stay of execution. Section 6(1 )(e): Public policy

In Lane v Questnet [2010] NZAR 210 the Court of Appeal noted that the relevant principles in relation to the public policy ground of s 6(1)(e) were discussed by the Court m R~eves v One World Challenge [2006] 2 NZLR 184 (see section [5.2(h)] above), albeit not m _the _context of statutory reciprocity. The Court emphasised that the public policy exception is a narrow one that involves notions of "repugnance" and matters that would "shock the conscience" of a reasonable New Zealander. In Lane v Questnet, the Court referred with approval to the discussion of the relevant policy considerations under s 6(1)(e) in Banque Indosuez v Bourgogne HC Auckland M662/89, 12 January 1990. These considerations include judicial comity and the need "n~t to endanger existing reciprocity arrangements". The cautious approach to the public policy ~ound that had been endorsed in Banque Indosuez v Bourgogne was approved and adopted m Bank of Kiribati Ltd v Harrison (1990) 3 PRNZ 111 and Marine Services Ltd v Bolton (1992) 6 PRNZ 173. In subsequent proceedings between Bolton and Marine Services, th~ Court of Appeal ultii:riately found that it was not contrary to public policy to enforce the Judgment from the High Court of the Solomon Islands in a situation where that judgment had been irregularly obtained and the Court of Appeal of the Solomon Isl~nds had so held, but had declined to set the High Court judgment aside unless and until Bolton ha_d _purged his contempt (Bolton v Marine Services Ltd [1996] 2 NZLR 15 (CA?). striking result was that the New Zealand court was willing to enforce the foreign Judgment even though it had been irregularly obtained.

!he

While recognising this cautious approach, in Dymock v Bilbie (1999) 13 PRNZ 158 the Court concl~ded that on the facts (a judgment creditor seeking registration of judgment for a sum m e~cess. of lawful entitlement, and tainted by maintenance) it would be contrary to public policy to enforce the judgment. In Lane v Questnet, the a~plicant _sought to set aside a Hong Kong judgment obtained by default, that ?ad been registered m New Zealand, on the basis of an alleged absence of adequate notice of the date of a hearing at which a default judgment was entered. The Court App~al upheld the ~igh Court's finding that enforcement would not be contrary to p~blic policy as the appl~cant had had Hong Kong solicitors who had taken steps, provided an address for service and had the right to seek a stay but did not do so. The Com: of Appeal was also influenced by the fact that what had occurred in Hong Kong in relation to entry of a default judgment appeared parallel to what could have occurred in New Zealand under the High Court Rules.

o!

In Abe v Azi~ H~ Aucklan~- CIV 2010-404-3741, 4 April 201 I, the applicant sought to have the regis~ati~? of a FiJian judgment set aside on the basis of an argument that the lega~ system m FIJI ':as curre~tly an unlawful legal system without credibility. The appl~cant produced articles published on the internet in support of the submission, but nothm~ mor~. The Court accepted the respondent's submission that Fijian judgments were still entitled to be registered under the Reciprocal Enforcement of Judgments Act as there _ha~ been ~o revocation of the relevant Order in Council. The Court accepted the submission that It w?~ld contrary to the Act for the High Court to refuse, in a general sense, to enforce a FIJrnnJudgment where the Act still applies to such judgments.

Section 7 was considered in Hunt v BP Exploration Company (Libya) Ltd [1980] 1 NZLR 104. In that case, an appeal against the English judgment registered in New Zealand had been filed, and a hearing was pending. Barker J held that the discretion under s 7 was very wide indeed, and that in that case, where the appeal was bona fide and had genuine prospects of success, it was appropriate to adjourn the application to set aside registration until the appeal had been dealt with by the English Court of Appeal (at 114). His Honour saw no point in setting aside the registration meantime: given that the adjourned application operates as a stay of execution of the registered judgment (r 23.22(1)(c)) this will normally be the case. In Banque Indosuez v Bourgogne HC Auckland M662/89, 12 January 1990, the Court dismissed an application to set aside registration under s 7 (among other grounds). No appeal had been filed, despite the expiry of the relevant time limit. There was no affidavit evidence of an intention to appeal, or to seek leave to appeal out of time: the Judge did not accept as sufficient evidence an intimation from counsel for the judgment debtor that he had spoken to his client, who had affirmed an intention to seek leave to appeal. In Lane v Questnet the Court of Appeal noted that the scope of the discretion under s 7 ( 1) is very wide, as had been observed in Hunt v BP Exploration Company (Libya) Ltd. However, the Court considered that it would not be appropriate to attempt to secondguess the approach that had been taken in Hong Kong, where no stay had been obtained. Although the applicant had informed his counsel that he had a favourable opinion from a Hong Kong silk about his prospects on appeal, there was no evidence of that before the Court. The Court also saw the following factors as highly relevant: the appeal to the Hong Kong Court was not the applicant's first appeal; the Hong Kong courts appeared to have considered the matter raised and it was an area where comity was important; and delays in the conduct of the Hong Kong proceeding and the New Zealand appeal were also relevant. The Court saw the facts of the case as more similar to those in Banque Indosuez than to those in Hunt. The court will not set registration aside on the grounds that the judgment proceeds on an incorrect legal or factual basis, but may defer entry of final judgment in New Zealand to allow the judgment debtor to apply for a rehearing in the foreign country. 119 Note also the comments of Doogue J in Clyde & Co v Sovrybflot Commercial Corporation (1998) 12 PRNZ 1, that, had the judgment been registered, the Court would have allowed its order to lie in court pending the outcome of the judgment debtor's appeal in the original jurisdiction. The Court considered that where, as in this case, the judgment creditor already had a Mareva injunction (now referred to as a :freezing order) issued in its favour, this approach struck an appropriate balance between the interests of the parties. If the judgment creditor had been given immediate satisfaction and the judgment debtor had subsequently succeeded in its appeal, the Court would have had no jurisdiction to assist the debtor to recover against the creditor.

?e

119

82

See Marine Services Ltd v Bolton ( 1992) 6 PRNZ 173

83

Goddard and Mclachlan • Enforcement of Foreign Judgments NZLS CLE Seminar • Private International Law

Application to set aside not pursued diligently

(a) it is a final and conclusive judgment that is given m a civil proceeding by an Australian court; or

Where a judgment debtor files an application to set aside registration, and then fails to purs~e !he application diligently, the judgment creditor may apply to strike out that apphcatlon (see PG Nominees Ltd v Bell (1985) 2 PRNZ 497). Once the application is struck out, the judgment creditor will be able to proceed to enforce the registered judgment in New Zealand.

(b) it is a final and conclusive judgment given in a civil proceeding by an Australian tribunal, where an Order in Council applies the TTP A to that tribunal and to the relevant type of judgment; or

(g)

(d) it is a final and conclusive judgment given in a civil or criminal proceeding by an Australian court; and the judgment is an order made under the Australian Act by an Australian court for the payment of expenses incurred by a witness in complying with an Australian subpoena served on the witness in New Zealand; or incurred by a person in connection with the costs associated with remote evidence; or

Recognition of judgments under the 1934 Act

Section 9 of th~ Act provides that a judgment to which Part I applies, or would apply if it we~e_a money JUd~ent, is recognised in New Zealand as conclusive between the parties to it m all proceedmgs founded on the same cause of action: the judgment may be relied on by way of defence or counterclaim. The judgment will be recognised whether or not it has _been registered. A judgment will not however be recognised if it has been, or would be hable to be, set aside on certain specified grounds (s 9(2)). See Dicey at 648-649.

5.4

Enforcement of Australian judgments under the TTPA

As noted ab_ove, the 1934 Act will cease to apply to Australian judgments given after the d~te on whi~h the TTP A comes into force. The TTP A will introduce a new and very different regime for the recognition and enforcement in New Zealand of Australian judgments given after that date. Under the Act, most final judgments of Australian courts and tribunals will be able to be recogni~ed and enforced in New Zealand. The TTPA applies to both money and non~on~y Judgments. But it does not apply to interim orders: rather than making Australian mtenm orders enforceable in New Zealand, the TTPA contemplates New Zealand courts granting interim relief in support of Australian proceedings (and vice versa). T~e TTP A will apply to civil judgments of all Australian courts, and judgments of tribunals where an Order in Council has provided for the TTP A to apply to that tribunal and to the relevant type of judgment. The TTP A jettisons almost all of the familiar private international law criteria for ~n~or~e~ent of judgments in the trans-Tasman context. In particular, there is no Junsdictlon requirement, and the only defence to enforcement is that enforcement would be c~ntrary to public policy (in the narrow sense discussed above). The basic idea is that ~ny_ issues that the judgment debtor wishes to raise in relation to jurisdiction, natural Justice, or fraud should be raised in the original court rather than in the enforcement proceedings. Subpart 5 of Part 2 of the TTP A provides for enforcement and recognition in New Z~aland of "registrable Australian judgments", as defined in s 54. Judgments delivered pnor to the commencement of the Act do not come within the TTP A regime: they can 120 only be enforced under the 1934 Act (if applicable).

(c) it is a final and conclusive judgment given in a criminal proceeding by an Australian court that requires payment to an injured party of a sum of money by way of compensation, damages, or reparation; or

(e) it is a final and conclusive judgment that is registered in an Australian court under the Foreign Judgments Act 1991 (Aust). There are, however, certain categories of judgment that are excluded from the scope of 122 this subpart. A judgment is not a "registrable Australian judgment" if: (a) it relates to an excluded matter (currently defined to include certain family law matters such as dissolution of marriage and maintenance orders); or (b) it is a non-money judgment of a kind that is declared, pursuant to an order under the Act, to be excluded from recognition or enforcement; or (c) it is a judgment given in an Australian trans-Tasman market proceeding (subpart 6 provides a separate regime for such judgments); or (d) it is a judgment imposing a civil pecuniary penalty (subpart 7 provides a separate regime for such judgments); or (e) it is an order under proceeds of crime legislation (there is a stand-alone regime for recognition and enforcement of such orders); or (f) it is an order relating to the granting of probate or letters of administration or the administration of the estate of a deceased person; or (g) it is an order relating to the guardianship or care of a person who is incapable of managing his or her personal affairs; or (h) it is an order relating to the management of the property of a person who is incapable of managing that property; or (i) it is an order relating to the care, control, or welfare of a child; or (j) it is an order that, if contravened by a person to whom it is directed, will make the person liable to conviction for an offence in the place where it was made; or

(k) it is a judgment given before the commencement of the Act. The registration process is much simpler than under the 1934 Act. An application for registration of a registrable Australian judgment is made to the Registrar of either the High Court, or a New Zealand court that has the power to give the relief provided for in

A judgment is a registrable Australianjudgment if: 121 120 12 1

Trans-Tasman Proceedings Act 20 IO, s 54(2)(k). Trans-Tasman Proceedings Act 20 I 0, s 54( I).

122

84

Trans-Tasman Proceedings Act 2010, s 54(2).

85

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

th e JU . dgment. 123 Regulations will prescribe an application form, and set out certain procedural requirements. An application must be made within 6 years from the date on which the judgment was enter_ed, o~ any relevant appeal determined. That time frame can be extended by the Court (a discret10n that parallels s 35 Limitation Act 2010 discussed above in section 5.2(m)). 124 '

Zealand court will not decline to enforce a registered Australian judgment, or delay, limit or prohibit its enforcement, on any of the following grounds: 131 (a) enforcing the judgment would involve the direct or indirect enforcement in New Zealand of an Australian public law: (b) Australian tax is payable under the judgment: (c) the judgment imposes a civil pecuniary penalty or a regulatory regime criminal fine.

If the j~d~ent is a _registrable Australian judgment, the Registrar must register it. No other cntena are applied by the Registrar. If the jud~ent p~ovides f~r different matters (for instance, it relates to different subject ~atters or gi~es different kinds of relief), and if some of those matters would, if contained m a sep~rate Judgme~t, make _that sep~rate judgment a "registrable Australian judgment", the Registrar can partially register the Judgment in respect of those matters. 125 A New Zealand court has_ th~ power t~ set aside registration of an Australian judgment in Ne~ Ze~land on the apphcat10n of a liable person within 30 working days after notice of registration, or a longer period if an extension has been applied for. The New Zealand court can set aside the registration of the judgment if the court is satisfied that: 126 (a) the jud~me_nt was registere? in_ contravention of the Act (ie is not a registrable Au~trah~n Judgment, or reg1strat10n was out of time, or a process requirement for registrat10n was not met); or (b) enforcement of the judgment would be contrary to public policy in New Zealand; or ( c) the judgment was given in a proceeding the subject matter of which was immovable property, or a proceeding in r~m the subject matter of which was movable property; and ~hat property was, at the time of the proceeding in the original court or tribunal, not situated m Australia. A registered A~s~alian judgment has the same force and effect and can be enforced in the sa~e way 12~s if rt were a jud~ent given by the New Zealand court in which it is registere~. ~owever, ~ registered A~stralian judgment is only capable of being enforced if the Judg_ment is capabl~ ?f bemg enforced in the original court or tribunal (so cannot be enforced if for example 1t rs stayed, or if it has been satisfied). 128 A New Z~aland court in which an Australian judgment has been registered can order that a pr?ceedi_ng for enforcement of the Australian judgment not be commenced until a specified time or event, or that enforcement will be stayed for a specified period_ 129 This enables the New Zealand cou1: to defer_enforcement in New Zealand while an appeal or other form of challenge to the Judgment 1s pursued in Australia. The enforcem_ent o~ regist~red Australian judgments is not affected by the operation of any rule of pnvate mtemational law in operation in New Zealand_ 130 Accordingly, a New 123 124 125 126 127

128 129 130

Trans-Tasman Proceedings Act 20 IO s 56 ' . Trans-Tasman Proceedings Act 20 10, s 56(2)(c). Trans-Tasman Proceedings Act 20 IO s 60 ' . Trans-Tasman Proceedings Act 20 IO s 61 (2) ' . Trans-Tasman Proceedings Act 20 IO s 63 ' · Trans-Tasman Proceedings Act 20 IO s 64 ' · Trans-Tasman Proceedings Act 20 IO 65 ' Trans-Tasman Proceedings Act 20 I 0, s 68( I).

Recognition and enforcement in New Zealand of judgments given in Australian transTasman market proceedings

A judgment that is given in an Australian trans-Tasman market proceeding and that does not impose a civil pecuniary penalty is treated as a registrable Australian judgment. 132 In this context, the category of enforceable judgments includes an interlocutory order that is an interim or interlocutory injunction, or any other interlocutory or final order requiring a person to perform an act, make a payment that is not a civil pecuniary penalty or refrain from performing an act or engaging in specified conduct. 133

Recognition and enforcement in New Zealand of Australian judgments imposing civil pecuniary penalties

The TTP A provides for enforcement of civil penalties imposed in Australia, subject to a "negative list" regime. An Australian judgment imposing a civil penalty will be treated as a registrable Australian judgment unless it is a kind of judgment that is declared by an 134 Order in Council to be excluded from recognition or enforcement.

Recognition and enforcement in New Zealand of Australian judgments imposing regulatory regime criminal fines

The TTP A also provides for enforcement of certain Australian fines under regulatory regimes, on a "positive list" basis. An Order in Council will prescribe the types of fines that can be enforced in New Zealand, and judgments imposing such fines will be treated as if they were registrable Australianjudgments. 135

5.5

Section 56 of the Judicature Act 1908 provides:

131

132 133 134

135

86

Statutory enforcement of Commonwealth judgments to which the 1934 Act does not apply

Trans-Tasman Proceedings Act 20 I 0, s 68(2). Trans-Tasman Proceedings Act 20 I 0, s 70 Trans-Tasman Proceedings Act 20 I 0, s 71. Trans-Tasman Proceedings Act 2010, s74. Section 75 limits the courts in which enforcement of a civil penalty judgment can be sought. See subpart 8 of Part 2.

87

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Enforcement of Foreign Judgments

56. Memorials of judgments obtained out of New Zealand may be registered (1) Any person in _whose favour any judgment, decree, rule, or order, whereby any sum _o~ money 1s made payable, ha_s been obtained in any court of Her Majesty's do~ruons may. cause a memonal of the same containing the particulars ~eremafter ment10ned, and authenticated by the seal of the Court wherein such Judgment, decree, rule, or order was obtained, to be filed in the office of the High ~ourt; and such memorial being so filed shall thenceforth be a record of such JUd~ent, decree, rule, or order, and execution may issue thereon as hereinafter provided.

(2) Every seal purporting to be the seal of any such Court shall be deemed and taken to be the s~al of such Court until the contrary is proved, and the proof that any such seal 1s not the seal of such Court shall lie upon the party d · objecting to the same. enymg or (3) Every such memorial shall be s_igned by ~he party in whose favour such judgment, decree, rul_e, or or?er was obtamed, or his attorney or solicitor, and shall contain the followmg part1culars, tha~ is to say: The names and additions of the parties, the form or ?a~re of the a_ct10n or other proceeding, and when commenced, the date _of the s1gnmg or entenng-up of the judgment, or of passing the decree, or of making the rule or order, _and the amount recovered, or the decree pronounced, or rule _or o~der made, and, 1f there was a trial, the date of such trial and amount of verdict given. (4) The ~ourt or any Judge thereof, on the application of the person in whose favour such Ju~gment, decree, rule, ?r order was obtained, or his solicitor, may grant a rule or issue a summons caIII?g upon the person against whom such judgment, decree, rule, or or~er was obtamed to show cause, within such time after personal or sue~ other service ~f the rule or summons as such Court or Judge directs, why execution should not 1ss~e upo~ such judgment, decree, rule or order, and such ~le or su~ons shall _give notice that in default of appearance execution may issue accordmgly; and 1f the person served with such rule or summons does not appear, or does not show sufficient cause against such rule or summons such Court or Judge, on due proof of such service as aforesaid, may make th~ rule absolute, or make an orde~ for issuing execution as upon a judgment, decree, rule, or order of_the Court, subject to such terms and conditions (if any) as such Court or Judge thmks fit. (5) All such proceedings may be had or taken for the revival of such judgment dec~ee, rule, or ?rder, or the enforcement thereof by and against persons no~ parties to such Ju~gment, decree, rule, or order as may be had for the like purposes upon any Judgment, decree, rule, or order of the Court.

Section 56 of the Judicature Act establishes an alternative procedure to bringing an action ~t comm~n la~ for t~e- enf~r~~ment of a money judgment obtained in any court in any of Her MaJesty s dommions . The procedure is not often used. Section 13 of the 1934 Act provides thats 56 d?e~ not apply to judgments which are enforceable in New Zealand under _the 1934 ".'-ct. This IS a more complex question than simply concluding that s 56 is una~~ilable for Judgm_e?ts to which Part I of the 1934 Act applies. Full argument and a iec1s10n_ on _enforceability under the _1934 Act may be necessary prior to consideration of he apphcat10n of s 56, as occurred m Gordon Pacific Developments v Conlon [1993] 3 NZLR 760. In Austin v Nicholson ~19~4) 2 PRNZ 494 the phrase "Her Majesty's dominions" was held to refer to all terr1tones under the sovereignty of the Crown, including the United

Kingdom. So s 56 applies to all money judgments from countries under the sovereignty of the Crown: (a) which were given by any court in the country, if the 1934 Act does not extend to that country; (b) which were given by a court in a country to which the 1934 Act extends, but the court is not a superior court, or the judgments are otherwise unenforceable under the 1934 Act. The procedure prescribed by s 56 is quite simple. A memorial of the judgment which complies with s 56(3) must be filed in the High Court. The judgment creditor then applies to the court to make an order requiring the judgment debtor to show cause why execution should not issue on the judgment, within such time after service of the order as is directed by the court. The application must be made as an originating application under Part 19 of the Rules (r 19.2(k)). If the judgment debtor is served and does not appear, or appears but does not satisfy the court that the judgment should not be executed, the court may make an order for issuing execution on the memorial as if it were a judgment. Costs may be awarded to the successful applicant (Mikac v Mikac (1979) 2 PRNZ 489). Notice of any costs sought should be given to the judgment debtor. Section 56 does not specify the grounds on which the defendant could establish that the overseas court's judgment should not be enforced. The better view is that s 56, while altering the procedure for enforcement of certain judgments, did not replace the common law rules as to which judgments are enforceable. A defendant could successfully oppose enforcement by showing that the judgment was not of the kind enforceable at common law - that is, that the criteria set out in section 5.2(a) above were not satisfied - or that one of the defences referred to in section 5.2(f) above was available (see Gordon Pacific Developments Pty Ltd v Conlon [1993] 3 NZLR 760). This approach was confirmed in Kemp v Kemp [1996] 2 NZLR 454, where Tipping J held that in determining whether there is sufficient cause shown under s 56 not to allow execution of a foreign judgment in New Zealand, the court will usually start with an examination of the general conflict of laws position. 137 Applying the common law approach, Tipping J concluded that there was no reason not to enforce the judgment (in particular, allegations that the English judgment had been improperly obtained because Mr Kemp had received no adequate notice of the hearing were not established). Tipping J held that (contrary to the Master's decision under review), the Court had no power to decide whether it will enforce the foreign judgment in whole or in part unless the judgment is truly severable and different considerations can properly be said to apply to different parts of the judgment. The words in s 56(4) "subject to such terms and conditions (if any)" are properly read as permitting terms and conditions relating to the method or timing of execution, 138 and not as a "back-door" means of examining the perceived merits of the foreign judgment. In Autoterminal.com UK Ltd v Croy [2006] NZAR 324, an application was made under s 56 for an order for execution of judgments given by the Southampton County Court in 137

136

M. [

oy an_ Assurance Consultants Pty Limited v Hughes HC Auckland CP 951 /89 4 March 1991 confirms the alternative nature of these procedures. '

88

138

Tipping J notes later in the judgment (at 460) that he does not exclude the (remote) possibility that something outside of what he describes as "the conventional criteria" might constitute suffic ient cause under s 56(4) to decline to enforce a foreign judgment. See Platt v Siegel ( 1918) GLR 70

89

Goddard and Mclachlan • Interim Relief NZLS CLE Seminar• Private International Law

the UK, which was an inferior court to which the Reciprocal Enforcement of Judgments Act 1934 did not extend. An issue arose as to whether it was appropriate to make such an order where part of the judgment had already been paid. The Court concluded that an order for execution could be issued, but with a restriction on the plaintiff seeking to enforce the judgment in respect of monies already paid. The Court referred to Montgomery Jones & Co v Corry & Co (1911) 14 GLR 111, where a condition of the execution order was that the plaintiffs give an undertaking that credit to the extent of the sums which it was admitted had been paid should be given. The order was made subject to the term that the execution was not to be issued for 30 days (to enable settlement discussions to occur) and that an undertaking that credit would be given for the sum already paid would be given by the plaintiff.

6.

The attraction for a plaintiff in using the s 56 procedure, rather than bringing an action at common law, is that the burden of showing that the judgment should not be enforced is placed on the defendant.

These issues arise very frequently in the context of cross-border fraud claims: often assets have deliberately been removed from one country to another, or to ~e~eral_ ~ther places. If there is to be any prospect of effective relief against the fraudster,_ it is cntical t? be able to freeze assets which the plaintiff seeks to trace, or out of which a mo~ey Judgment might ultimately be satisfied. A related issue that often arises ~n sue~ cases 1s the need to discover where the relevant assets are in fact located - especially give~ the ever _greater ease with which assets can be moved across borders, and dealt wit?. at a distance. Disclosure orders are an important adjunct to many freezing orders (traditionally referr~d to as Mareva injunctions) - indeed they are often the most i~portant element of the relief sought, since they enable assets to be located in other countnes, and frozen by the courts in those countries.

The memorial of the foreign judgment will normally express the sum payable in a foreign currency, raising the question of the date at which the judgment debt should be converted into New Zealand currency before execution. The most appropriate date will normally be the date of execution (Mikac v Mikac, and see section 5.2(n) above). There is no mechanism in s 56 for proving and obtaining an order for payment of the overseas rate of interest. It appears that the foreign judgment will not carry interest for the period up to registration in New Zealand: nothing in s 56 provides that interest will be payable, or that the foreign judgment should be treated as a New Zealand judgment for any purpose other than execution (see Mikac v Mikac). The inability to recover interest may be a significant disincentive to use of the s 56 procedure.

5.6

6.1

INTERIM RELIEF

Introduction

In many cases, meaningful final relief can be obtained against_ a _defendant only if appropriate interim relief is available to preserve a~sets, ~r mamtam status qu?, pending final determination of the claim. Where the dispute mvolves parties or as~~ts m more than one country, an application for interim relief raises a number of additional issues that go both to the scope of the relief available, and to the form of the orders that

t?e

will be made.

Effective interim relief also often requires cooperation be~een courts in different countries_ for example, where the substantive claim is pending m one country, _but assets which are the subject of the claim, or out of which a judgment could be satisfied, are situated in other countries.

Indirect enforcement of foreign judgments

Where a judgment creditor has obtained a judgment in a foreign jurisdiction which has not been satisfied, the foreign court may take steps under its domestic law to enforce the judgment such as: (a) appointing a receiver to collect the judgment debtor's assets to meet that claim; or (b) making an order bankrupting an individual debtor, or make an order for the winding up or administration of a corporation, for the benefit of creditors generally.

The 2008 High Court Rules introduced some important ch~nges in the _fiel~ of in~er~ relief. The Rules now permit the High Court to grant certam forms ~f mtenm reh~f m support of overseas judicial and arbitral proceedings and have c~dified the prev10us common law regarding Mareva injunctions (now referred to as freezmg orders under ~he new regime). The High Court now also has an express jurisdiction to grant freestandmg freezing orders in support of foreign proceedings. This section of the booklet looks at the issues that arise:

There is authority which suggests that equity will in some circumstances recognise the title of a foreign receiver appointed to collect the judgment debtor's assets to meet a particular claim (see White v Verkouille [1990] 2 Qd R 191 and Dicey paras 30-127 to 128.

•

where interim relief (in the form of an injunction or disclosure order) is sought in New Zealand proceedings in respect of assets outside New Zealand;

•

where a person against whom injunctive relief is sought is not resident in, and does not carry on business in, New Zealand;

For the recognition of orders made in a foreign jurisdiction bankrupting an individual, see the Insolvency (Cross-border) Act 2006, giving effect to the UNCITRAL Model Law on Cross-Border Insolvency, and Dicey rr 197-201. For the effect of foreign orders appointing liquidators or receivers of a corporation see the 2006 Act and Dicey r 167. See also Heath and Whale on Insolvency (online looseleaf ed, LexisNexis), chapters 52 and 54, Brookers Insolvency Law (looseleaf ed, Brookers), "Cross-Border Insolvency", chapter 5.

•

where a New Zealand court is asked to grant interim relief in support of proceedings in another country; and

•

where a disclosure order is sought against a person other than a defendant in respect of assets outside New Zealand.

90

91

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Interim Relief

6.2

Interim relief in respect of assets outside New Zealand

(a)

Grounds

Rule 32.5(4) of the High Court Rules provides that the Court may make a freezing order against a judgment debtor or a prospective judgment debtor if: ... the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because-

Under r 32.2 a court can make a freezing order against a party to New Zealand proceedings (if the New Zealand court has jurisdiction over the person) even though those orders may relate to assets outside New Zealand. Thus if a plaintiff claims an interest in assets which a New Zealand defendant has removed from New Zealand ' the New Zealand . . court can (if the other requrrements for granting interim relief are made out) make an inter partes order against the defendant restraining the defendant from dealing with those assets. A fr~ezing order can be ~n extremely useful form of interim relief. Under the Rules, a freezmg order may restram a respondent from removing any assets that are located in or outside New Zealand or from disposing of, dealing with, or diminishing the value of, those assets (r 32.2(2)). T_he ability for the High Court to make freezing orders under the Rules was recently discussed by the Court of Appeal in Hannay v Mount [2011] NZCA 530. The Court explained the principles as follows: 139

(a) the judgment debtor, prospective judgment debtor, or another person might abscond; or (b) the assets of the judgment debtor, prospective judgment debtor, or another person mightbe(i)

removed from New Zealand or from a place inside or outside New Zealand; or

(ii)

disposed of, dealt with, or diminished in value (whether the assets are in or outside New Zealand).

As acknowledged by the Court of Appeal in Hannay v Mount, the risk of dissipation of assets is central to the Court's freezing order jurisdiction. In South Pacific Industrial Ltd v United Telecoms Ltd [2012] NZHC 688 at [25], Heath J discussed the approaches that have been taken to the evaluation of this risk: While the authorities indicate that risk of dissipation is central to exercise of the 145 freezing order jurisdiction they express the effect of the risk in different ways. The mode of expression, necessarily, reflects the particular issue before the Court at the time. In many cases, it is seen as the risk that a judgment or award in favour of a 146 claimant may go unsatisfied. However, it has also been described as a risk that the 147 Court's processes may be frustrated. When assessing the former, a Court should consider them in the same way that a prudent or sensible commercial person would do_ 148

The threat of disposal of the assets, or diminution of their value is essential to the application for a freezing order. Freezing orders (also known as Mareva injunctions) are th~s a va~uable prote~tive mea~ure for those commencing civil proceedings. 140 The essenbal_bas1_s of a freezmg order 1s to prevent the dissipation of assets by an actual or pros~ective Ju~gment ~ebtor, when _such dissipation has the effect or object of denyrng the claimant or Judgment creditor satisfaction of their debt. 141

Rule 3~.5 p~ovides that the regime relating to freezing orders will apply if judgment has been given m favour of an applicant, or the applicant has a good arguable case on an accrued or prospecti~e cause ~faction that is justiciable in the High Court, or in a foreign court where the reqmrements m r 32.5(3), discussed in section 6.4(c) below, are satisfied.

Risk of disposal is sufficient. It is not necessary to establish an intent to defeat or cheat the applicant of any judgment sum: TGB Holdings Ltd v BFP Trustees No 1 Ltd HC Whangarei CIV-2009-488-566, 8 April 2011.

In Hannay v Mount, the Court of Appeal discussed the "good arguable case" threshold. The Court said: 142

(b)

Befo~e an order is granted, the Court must be satisfied that the applicant for the freezrng order has a good arguable case on an accrued or prospective cause of action · h 143 . agamst t e respondent. In order to establish a good arguable case, the applicant must show that the cause of action is at least tenable. 144 . . . A good arguable case against the respondent is therefore established if the allegatio~s in th~ proposed claim are capable of tenable argument and are supported by sufficient evidence, bearing in mind the early stage at which the application is likely to be brought.

139 at (20]. 140 See Deu_tsche Schachtbau-und Tiejbohrgesellschaft MBH v Shell International Petroleum Co Ltd (trading as Shell Internalional Trading Co) [I 990] I AC 295 (HL) at 3 I 7, where Sir John Donaldson MR stated: -The Mareva innovation, which time ha~ shown to_ be one of the most imaginative, important and, on the whole, most beneficent of modem times, lay m giving a plaintiff some degree of protection before he became a judgment creditor and in 141 ant1c1pat1on that he would become one ." 142 Camdex International Ltd v Bank of Zambia (No 2) (1997] I WLR 632 (CA) at 636 per Sir Thomas Bingham MR. at (21 ]-22. 143 ff h ig _Court Rules'. r 32.5( I)(b); Camdex International Ltd v Bank of Zambia (No 2) [ 1997] I WLR 632 (CA) at 636 per Sir Thomas Bingham MR. 144 See Kuwait Asia Bank EC v National Mutual Life Nominees Ltd (No 2) [ 1989] 2 NZLR 50 (CA) at 55 .

92

Territorial effect

The position of third parties outside New Zealand requires special consideration, where an order is made by a New Zealand court in respect of assets outside New Zealand. The general rule, where the court grants injunctive relief (including freezing orders) restraining dealings with assets in New Zealand is that third parties with notice of the order will be in contempt if they act inconsistently with that order. This rule is of particular importance where the defendant has funds in a bank account in New Zealand. If the bank is given notice of the order, it will freeze the account. Even if the defendant is minded to disregard the order and attempt to deal with the funds, the bank will not permit such dealings. This provides a significant additional degree of assurance that the order will be effective. 145

!7Z Ltd v A-Zand AA-LL [1982] I All ER 556 (CA) (per Kerr LJ at 571), Tranquil Holdings Ltd v Hudson (1987) 2 PRNZ 551 (HC) and Euro-National Corporation v Petricevic Financial Services Ltd ( 1989) 2 PRNZ 351. 146 See the authorities collected in Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft m.b.H Und Co. KG; The Niedersachsen [1983] I WLR 1412 (CA) at 1422- 1423]. 147 For example, Patrick Stevedores Operations No 2 Ltd v Maritime Union of Australia (1998) 153 ALR 643 (HCA) at 658 (Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ). 148 Third Chandris Shipping Corp v Unimarine SA [ 1979] 2 All ER 972 (CA) (per Lawton LJ) at 987. See also GatxFu/ler Australasia Pty Ltd v Wilsons (NZ) Portland Cement Ltd [ 1985] 2 NZLR 11 (HC) at para (22] and Raukura Moana Fisheries Ltd v The Ship "Irina Zharkikh "[200 I] 2 NZLR 80 I (HC) at 827.

93

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Interim Relief

How~ver,_ it_ w?u!d be inappropriate for a New Zealand court to seek to exercise its coercive Junsdict10~ against third parties outside New Zealand - such as, for example, ov~rs~as banks holdmg funds of a defendant to which a worldwide freezing order applies. !~s IS~ue has be~n addressed by the English courts by requiring extraterritorial Mareva lilJunctions (freezmg orders) to include in their terms a specific provision which makes it clear that the order is_ not addresse_d to o~e~seas persons and that the court is not seeking to make orders affectmg them. This provis10n, first introduced in Babanaft International Co SA v Bassatne [1990] Ch 13 (CA) and often referred to as the "Babanaft proviso" has been refined in a number of subsequent cases. 149 ' On the introduction of the ne~ High Court Rules, a standard form Freezing Injunction was promulgated for the first time (Form G 38), which must be used. This includes two paragraphs that incorporate the current form of the "Babanaft proviso": 11 This order does not affect anyone outside New Zealand until it is declared enforceable by a court in the relevant country, (in which case it affects a person only to the extent that it has been declared enforceable) unless the person is(a) a person to whom this order is addressed, or an officer of that person, or an agent appointed by power of attorney of that person; or (b) a person who--

(i)

has been given written notice of this order at that person's residence or place of business within New Zealand· and

'

(ii)

is able to prevent acts or omissions outside the jurisdiction of this court that constitute, or assist, a breach of this order.

12 T~is order does not prevent, in respect of assets located outside New Zealand any third party from complying with' (a) what it_ reasonably believes to be the third party's obligations, contractual or otherwise, under the laws of the country in which those assets are situated or under the proper law of any contract between the third party and the respondent; and (b) any orders of the courts of that country, provided that reasonable notice of any application for such an order is given to the applicant's solicitors.

6.3

Interim relief against persons not resident in New Zealand

A_ p~rty _to_ su?s~antive New Zealand proceedings over whom the court properly has on~mal Junsdict10n may be subjected to interim relief whether or not that person is resident m ~ew Zealan? The key is whether that person was properly before the court in the substantive proceedmgs. This requirement raises no difficulties where that person: (a) is the plaintiff in the proceedings (so has submitted to the jurisdiction of the New Zealand courts); or (b) has been validly served in New Zealand· or

'

(c) has been served out of New Zealand, but:

149

(i) has submitted to the jurisdiction of the court by taking a step other than for the purpose of or in connection with a protest to jurisdiction (see section 4.3(b) above); or (ii) has made a protest to jurisdiction, which has been dismissed. However, caution is required where interim relief is sought against a person who has filed a protest to jurisdiction which has not yet been determined. There is English authority in favour of allowing the making and continuation of such an order (see Dicey at [8-032] [8-033]). But in Advanced Cardiovascular Systems Inc v Universal Specialties Ltd [1997] 1 NZLR 186 the Court of Appeal held that no interlocutory application could be entertained while a protest to jurisdiction was outstanding. The decision made sound sense in the context of the application for summary judgment under consideration in the case itself. To force a defendant to deal with a summary judgment application while he or she was contesting the jurisdiction would in effect render the protest nugatory. However, the same reasoning was applied to an application for an interlocutory injunction in Hamilton v Infiniti Capital Andante Ltd HC Auckland CIV-2008-404-2304, 7 May 2008. Here the Court's approach seems, with respect, more open to question, since the purpose of interim relief is not to determine the merits, but rather simply to preserve the position pending a determination on the merits, whether such a determination is made by the New Zealand court or by a foreign court. It is submitted that the Court's approach may now be open to reconsideration as a result of the creation of the new jurisdiction to grant interim relief in aid of proceedings commenced or to be commenced in a foreign court. This provides an alternative basis on which the New Zealand court may exercise its interim relief jurisdiction that is not dependent on a challenge to its jurisdiction on the merits. Rule 6.27(d)(ii) now provides that an originating document may be served out of New Zealand without leave when the claim is forinterim relief in support of judicial or arbitral proceedings commenced or to be commenced outside New Zealand.

The purpose of this provision was to address one of the impediments to jurisdiction identified by the Privy Council in Mercedes-Benz AG v Leiduck [1996] AC 284 (see section 6.4 below). In Yos v Heng HC Wellington CIV-2009-485-2346, 1 December 2009, Miller J noted that this head of jurisdiction did not strictly apply to freezing orders (which are excluded from the definition of interim relief by r 7.81(3)(d), being subject to the specific provisions of Part 32). Nevertheless, Part 32 operates to confer jurisdiction on the Court to grant freezing orders in aid of foreign proceedings. Out of an abundance of caution, the applicant applying for a freezing order in aid of foreign proceedings against a non-resident respondent would be best advised to apply at the same time of application for leave to issue and serve the proceedings and the order under r 6.28. This should not cause a practical difficulty, since, if the applicant has good grounds for a freezing order, he or she will wish to apply for the order ex parte at the outset of the proceedings in any event, and not give the respondent prior notice of the institution of proceedings before seeking the order. The requirement in r 6.28(5)(a) that "the claim has a real and substantial connection with New Zealand" will be met, as long as the applicant can satisfy the requirement of r 32.5(3)(c) of "real connecting link", as to which see section 6.4(d) below.

For a discussion of the development of the Babanaft proviso, and its effect, see Dicey paras 8-0 J7 _ 8 o18.

94

95

NZLS CLE S e minar• Private Inte rnational Law

Goddard and Mclachlan • Interim Relief

6.4 Interim relief in support of foreign substantive proceedings In previous editions of this booklet, it was pointed out that there was a serious gap in New Zealand Jaw in its inability to grant interim relief here in aid of foreign proceedings on the merits. The lacuna had been identified as a result of the decisions of the House of Lords in Siskina v Distos Compania Naviera SA [1979] AC 210 and of the Privy Council on appeal from Hong Kong in Mercedes-Benz AG v Leiduck [1996] AC 284. This had the serious consequence that, unless the defendant was in New Zealand, or the New Zealand court could otherwise assert original jurisdiction over him or her in respect of the substantive claim, the court was powerless to grant interim relief, even in respect of the defendant's assets or other property here. This was a gap that had been remedied in England by legislation. It was opined by the authors of the 2001 edition of this booklet that no single legislative reform in New Zealand Private International Law could have greater 150 practical value. This is a view also shared by the co-author of the present edition.

Happily, therefore, the concurrent negotiation of the Trans-Tasman Proceedings Treaty and 2008 revision of the High Court Rules provided opportunities to address this issue. As a result, New Zealand now has three complementary provisions for the grant of such relief: (a) A general provision in r 7.81 for all types of interim relief (save for freezing orders, which have their own discrete code in Part 32); (b) Specific power in the Trans-Tasman Proceedings Act 2010 to grant such relief in aid of Australian proceedings (subject to the same rules of court that apply to other such applications); and, (c) Specific provision for the making of freezing orders in aid of foreign proceedings in r 32.5. The jurisdictional tests for the grant of such relief are congruent. Each set of provisions will be set out first, before the central requirement of "real connecting link" is analysed. (a)

·udicial proceedings, having a substantive claim which it may_ bring in New ~eala?d. J h d 7 81 (4) "the court must be satisfied that there 1s a real connectmg link Rat er, un er r · h · · 1 · · d. t· n of the between the subject matter of the interim relief and t e temtona Juris 1c 10 court". Rule 7.81 excludes from its ambit: (a) an in~erim payment; (b) dis~overy; (c) an a lication in relation to evidence; and (d) a freezmg order. In the cas~ of_1tems (b) :-- (~), t:is is because the cross-border aspect of each of these forms of relief 1s dealt ~1thdm other arts of the rules in specific ways (see Ch 7 of this booklet for cross- or er evide:Ce and discovery rules). Interim payments are excluded because the~ are not simply concerned with the preservation of the status quo, but rather mvolve a . ·rr s cIaim. . 151 consideration of the merits of the plamtl (b)

The TTPA will, when it comes into force, provide for New Zealand c?urts to give interi1:1 relief in support of civil proceedings in Australian court~ on _essenhaily lthed s~~e t~~~! that interim relief would be granted in support of proceedmgs m _New ea a~- · n 1 b TTP A comes into force, interim relief in suppo~ of Australian procee mgs can e obtained under r 7.81 , discussed above, and r 32.5 , discussed below.)

?e

Rule 7.81 has not yet been examined in detail by New Zealand courts. However, in Alcatel-Lucent NZ Ltd v Juniper Networks Australia Pty Ltd HC Wellington CIV-2009485-2289, 1 December 2009, Clifford J noted that an application under r 7.81 does not rely on the applicant, who is required to be a party or an intended party to those overseas 15

° Campbell

McLachlan ' Provisional Measures in Aid of Foreign Proceedings: Has the English Response been adequate?' in J Goldsmith (ed) International Dispute Resolution: the Regulation of Forum Selection (Transnational Publishers Irvington, New York, 1997) 169.

When an application has been made under the Act, the New Zealand court may give . . re 1·1ef 1"f: 154 mtenm (a) the court considers it appropriate to give the interim relief in support of the Australian proceeding; and (b) the court, if a proceeding similar to the Australian proceeding had been commenced in the court, (i)

would have had power to give the interim relief in the similar proceeding; and

(ii)

would have given the interim relief in the similar proceeding.

The procedural rules of the New Zealand court apply to the proceedi~g for interimz relliedf · were a Slilll · ·1ar procee d mg · commenced m the New ea an as if the Australian proceedmg court.1s5

(c)

Freezing orders in support of foreign proceedings

· the c ourt w1·th an abTty Rule 32.5 now expressly provides 1 1 to make freezing orders over assets in aid of substantive foreign proceedings. 151 152 153 154 155

96

t

Any party to a civil proceeding that has been commenced or is_ to commenc;d Australian court may apply to the High Court for interim rehe~ m_ support _o t_ e Austra1.ian procee d.mg. l51 Thi·s does not' however' extend to apphcat10ns · ·d dforfi mtenm d payments, discovery, a warrant of arrest of provgty, or any rehef prov1 e or un er subpart 1 or 2 of Part 4 of the Evidence Act 2006.

Interim relief generally in support of foreign proceedings

Rule 7.81 of the High Court Rules is a new rule that enables the High Court to grant certain forms of interim relief in support of foreign proceedings. Rule 7.81(2) provides that the High Court Rules apply to an application made under r 7.81 as if an application for interim relief had been commenced under the High Court Rules. Under r 7.81(3), in order for an order for interim relief to be made the court must be satisfied that there is a real connecting link between the subject matter of the interim relief and the territorial jurisdiction of the court. The order made must not be inconsistent with interim relief granted in the overseas proceedings by the court outside New Zealand.

Interim relief in support of Trans-Tasman proceedings

Cf. Case C- 391 /95 Van Uden Maritime B V v Firma Deco-line [1998] E.C.R. I- 7091 , [1999] Q.B. 1225. Trans-Tasman Proceedings Act, s 31 ( 1). Trans-Tasman Proceedings Act, s 3 1(2). Trans-Tasman Proceedings Acts 32(1). Trans-Tasman Proceedings, s 33.

97

Goddard and Mclachlan • Interim Relief NZLS CLE Seminar• Private International Law

The new High Court Rules have effectively reversed the rule established by the House of Lords in Siskina v Distos Compania Naviera SA [1979] AC 210 that freezing orders were dependent on substantive proceedings being brought within the jurisdiction: Yos v Heng HC Wellington CIV-2009-485-2346, 1 December 2009. Rather, r 32.5(1)(b) now expressly states that, subject to certain conditions set out in r 32.5(3), the Court may make a freezing order if an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in "another court". The definition of "another court" includes a foreign court: r 32.1. Where there are no substantive New Zealand proceedings on foot and a freestanding freezing order is sought in support of foreign proceedings, the application for the freezing order must be made by originating application: ff 19.2(y), 32.2(4). Rule 32.5(3) provides that the Court may make a freezing order in support of foreign substantive proceedings, provided that: (a) there is sufficient prospect that the other court will give judgment in favour of the applicant; and (b) there is a sufficient prospect that the judgment will be registered in or enforced by the court (as to which see the rules in Ch 5 of this booklet); and

(a)

Ancillary relief against a prospective judgment debtor

Under r 32 _3, the Court may, if it considers it just, make an ancillary order in addition to a freezing order. An ancillary order may be made for any of the following purposes:

(a) eliciting information relating to assets relevant to the freezing order or prospective freezing order; (b) determining whether the freezing order should be made; or, (c) appointing a receiver of the assets that are the subject of the freezing order.

Real connecting link

(b)

(a) there are assets of the prospective judgment debtor in New Zealand which may be enjoined (or other relevant property here), in which event the court's jurisdiction to grant interim relief is (save in exceptional cases) limited to the assets or property in New Zealand: Yos v Heng HC Wellington CIV-2009-485-2346 I December 2009; or, (b) the prospective judgment debtor is present in New Zealand and thus properly amenable to the enforcement jurisdiction of the New Zealand court in respect of asset freezing injunctions or other in personam orders addressed to him or her: Credit Suisse Fides Trust SA v Cuoghi [1998] 1 QB 818 . Since the jurisdiction under ff 7.81 and 32.5 is exercised in cases where the New Zealand court is not the court dealing with the substance of the matter, and since therefore the court need have no basis for the exercise of original jurisdiction, it is submitted that (save in very exceptional cases, such as fraud 157) it is proper that it should confine its grant of interim relief in aid of foreign court proceedings to situations in which the court has a clear basis for the exercise of enforcement jurisdiction directly over the property in question or the person of the defendant: Banco Nacional de Comercio Exterior SNC v 157

Transnational disclosure orders

(d) the order sought would not be inconsistent with interim relief granted by the other court: Motorola Credit Corp v Uzan (No. 2) [2003] EWCA Civ. 752, [2004] 1 WLR 113, at [119], discussing the effect of Refco Inc v Eastern Trading Co [1999] 1 Lloyd's Rep. 159 (CA) and Credit Suisse Fides Trust SA v Cuoghi [1998] 1 QB 818 (CA).

The test of "real connecting link" in r 7.81(3) and in r 32.5(3)(c)is derived from the caselaw of the European Court. 156 It is submitted, both on authority and in principle, that there will be a real connecting link where either:

156

6.5

As outlined in McGechan on Procedure at HR 32.3, possible a?cillary orders wil~ include· orders for discovery; interrogatories; search orders; delivery up offrass~ts, delive~ up of passport. An ancillary disclosure order is designe~ to ensure _that a eezmg order can be properly policed and is effective: Monasterio v Bu1~k_HC ~hnstchurch ~IV2008_409-1901, 21 August 2009; and see gene~all_Y on t~is topic m Pnva~e Intemat~onal Law Campbell McLachlan "The jurisdictional limits of disclosure orders m transnational fraud litigation" (1998) 47 ICLQ 3.

(c) there is a real connecting link between the subject matter of the order sought and the territorial jurisdiction of the New Zealand court; and

(d)

Empresa de Telecommunicaciones de Cuba SA [2008] 1 WLR 1936 at [19], followed in Yos v Heng HC Wellington CIV-2009-485-2346 1 December 2009 at [IO].

Case C- 391 /95 Van Uden Maritime BVv Firma Deco-Line [1998) E.C.R. l- 7091, [1999) Q.B. 1225, at [48) . Republic of Haiti v Duvalier [1990) I QB 202 (CA); Motorola Credit Corp v Uzan (No. 2) [2003] EWCA Civ 752, [2004] I WLR 113.

98

The position of third parties

Rules 32 .4 and 32.5 provide that the Court can also make ancillary orders against third parties.

o:;~;

Rule 32.5(5) provides that the court may make an ancillary or~er against ~ person than a judgment debtor or prospective judgment debtor (a third party) 1f the cou satisfied, having regard to all the circumstances, that(a) there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because(i)

(ii)

. · · · of the third party holds or is using, or bas exercised or is e~ercismg, a power disposition over assets (including claims and expectancies) of the Judgment debtor or prospective judgment debtor; or the third party is in possession of, or in a position o_f control or !nfluence concerning, assets (including claims and expectancies) of the Judgment debtor or prospective judgment debtor; or

(b) a process in the court is or may ultimately be availabl~ to the ap?licant, as a result of a judgment or prospective judgment, under which_ th~ third p~rty m: obliged to disgorge assets or contribute toward sat1sfymg the Judgme

!:

prospective judgment.

As noted above, a Court can make an ancillary order_ to elicit information relating to assets relevant to a freezing order or a prospective freezmg ~rder. As orders can _be m~de in relation to a prospective freezing order, this means that d1sclos~e ~rders a~amst third parties can be free-standing, in particular where the goal is to obtam mformatlon from a 99

NZLS CLE Seminar• Private International Law Goddard and Mclachlan • Interim Relief

pers ?n i? New Ze~land about ~ssets in other countries, which can then be the subject of app 1Icat10ns for relief to courts m those countries. 158 There are precedents for disclosure orders against persons other than the wrongdoers where: pnmary •

a sub stantiv~ claim (ie. not confined to seeking disclosure of information or documents) IS made agamst that person as a defendant for exam 1 t· interest in ty · th h d , P e asser mg an . d l~roper . e an of that party, or seeking compensation for that party's 1 m ea mgs with property; or roe

Ill

•

•

,f9

t

the person i~ resident in New Zealand or carries on business in New Zealand served with p~ocee?ings for discovery in New Zealand as of right on the ;:~~: t at th at person IS "n_uxed up_ in" t?e wrongful acts of others so as t~ facilitate their wrongdomg, and has mformat10n without which a claim could not be brought; 160 or bthehrelfspof~dhentdis.can age~~tor the defendant, and can be ordered to give discovery "on e a o t e e1endant.

!fowever,

where an order is sought against a third party (ie "a person other tha Judgment debtor or prospective judgment debtor"· r 32 5(5)) th C . . . n a fi · · . . . · · e ourt 1s exerc1smg a ~ure en orcement J~1sd1ct10_n._ That 1s to say, its jurisdiction over the third party · t Ra::d u~on ~n ex~rc1se of ongmal jurisdiction in order to determine a substantive di~~u~~ pa:ty~r, it anses simply by virtue of the power of the court over the person of the third

~:;eas been seen that, in. the case ?f freezin? _injunctions themselves, the courts have been 1 . . f'.t-1 n~t to place a thrrd P~~ m ~he position of being under conflicting obligations by 1 Imitmg t e effect of such an 1IlJUnct10n on third parties in relation to prope abroad see ~a;~ [12] of t~e "Ba_banaft proviso" to the prescribed form of freezing inju~ion in F~rm d 'set o_u t m s~ction ~-2(b) above). The same position applies in the case of disclosure :~ e~s agaI~st _th~rd_ parties. The court may only require disclosure of information held ithm the Jur1sdict10n, other than in exceptional cases 162 Co rt ·11 · · tf d · . . · u s WI strive to av01d P~ . mg_ respon ents m an 1mpo_ss1ble position where they are subject to conflicting 0 11 _ gat10ns ~der the_ laws of different countries, and will be very reluctant to order disclosure of ~nfo~~ti~n _held overseas where the result would be a conflict with the law of a State with Jur1sd1ction, according to established international law principles to 1 ; ~ at~ the conduct of t~at person in respect of that information. In particular New w~:c~n col:s ~robably will_ not (~nd should not) make disclosure orders against a ~erson h. h ciu on y ~e coi:iphed with ~y that person by breaching the law of a State in ~ IC t ,:} person !~ re~1den! or _cames on business, and in which the information is s~tuated. The position 1s qmte different if the information is held here I·n N z I d either b ·t · · · · ew ea an ecause 1 1s m w1thm the personal knowledge of the witness who is physicall;

present here and who may testify as to it; 164 or because the documents are held here. In those cases, it is no answer to a claim that disclosure is precluded by foreign law, since that would be to give foreign law an illegitimate extraterritorial application. (c)

Limiting the use that may be made of information that is disclosed

In order to prevent harassment of the defendant and unnecessary multiplicity of actions, the applicant must normally give an undertaking (under r 32.6(4)) that the information disclosed will not be used in foreign proceedings without the permission of the court. 165 Permission will be granted on the basis of the following eight guidelines. 166 First, the grant of permission should be just and convenient for the purpose of ensuring the effectiveness of the order, whilst not being oppressive to the parties to the New Zealand proceedings or to third parties who may be joined to the foreign proceedings. Second, permission may be granted on terms, including as to costs and as to the form of the foreign proceedings. Third, the interests of the applicant should be balanced against the interests of the other parties to the proceedings and any new party likely to be joined to the foreign proceedings. Fourth, permission should not normally be given in terms that would enable the applicant to obtain relief in the foreign proceedings which is superior to the relief given by the order (in particular by conferring a security interest which might accord the applicant priority to other creditors in the event of the defendant's insolvency). Fifth, the evidence in support of the application for permission should contain all necessary information, including as to the foreign law and proposed procedure and as to the assets in the relevant foreign country. Sixth, the applicant must show that there is a real prospect that such assets are located within the jurisdiction of the foreign court in question. Seventh, there must be evidence of a risk of dissipation of the assets in question. Eighth, normally the application should be made on notice to the respondent. But in cases of urgency, where it is just to do so, permission may be given without notice to the respondent, provided he has the earliest possible opportunity for an inter partes hearing. (d)

Disclosure orders where defendant may face criminal charges

Defendants in New Zealand and other countries have sought to escape compliance with disclosure orders, and have applied to have such orders rescinded, on the grounds that such orders are inconsistent with the privilege against self-incrimination. They have argued that they may face criminal charges in connection with the subject-matter of the proceedings, and that compelling them to disclose the location of assets (especially assets such as proceeds of specified (fraudulently taken) property) is therefore inconsistent with the privilege. Rule 32.3 specifically provides that: An ancillary order is subject to the court's jurisdiction to decide an objection raised on the ground of the privilege against self-incrimination conferred by section 60 of the Evidence Act 2006.

158 159 160 161

I~

163

See eg Gidrxs_lme Shipping Co Ltd v Tantomar-Transportes Maritimos LDA [ J 995] . case), Monasleno v Bu;ak HC Christchurch CJV-2008-409-1901' 21 August 2009. I WLR 299 (a post-Judgment Sec eg Bankers Trust Co v Shapira [ 1980] 3 All ER 353 (CA). Compare Norwich Pharmacal Co v Commissioners of Custom d E · [ application of this principle in the cross-border context, see Dice; p:~a 8-~~;:n~ ~~L;c~~I ER 943 (HL). For the See eg Republic of Haiti v Duvalier [1989] I All ER 456 (CA . n op cit at 28-29. McLachlan op cit at 19 ). This case has not been without its critics: see .

However s 60 only applies if "the information would, if so provided, be likely to incriminate the person under New Zealand law for an offence punishable by a fine or

.

Mac Kinnon v Donaldson Lufkin & Jenrett S, ·t · c [ 198 ER 577 (CA). See McLachlan op cit at 28-;9. ecun ,es orp 6] Ch 482; Re Mid East Trading Ltd [ 1998] I All See McLachlan op cit at 36 - 38 and (criticisin h · NZLR 278 295 (CA) · B . ' . g t e approach in Controller & Auditor-General v Davison [ 1996] 2 , , ranmgan v Davison [ 1997] I NZLR 140 (PC) (the Winebox litigation)) at 39 _ 46

100

164 165 166

Spencer v The Queen [1985] 2 SCR 278. See Babanaji; Re Bank of Credit and Commerce International SA [ 1994] I WLR 708 (CA) and Dicey para 8-017 . This paragraph summarises the effect of the guidelines laid down by the English Court of Appeal in Dadourian Group International Inc v Simms (Practice Note) [2006] EWCA Civ. 399, [2006] I W.L.R. 2499.

101

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Obtaining Evidence in Cross-Border Litigation

imprisonment": s 60(1 )(?) [ ~mphasis_ ad~e~]. ~o privilege against self-incrimination may be asserted based upon likelihood of mcrumnation under foreign law. 167

7.

OBTAINING EVIDENCE IN CROSS-BORDER LITIGATION

The increasing frequency with which litigation raises cross-border issues is reflected in the increasing number of cases in which it is necessary to: (a) obtain evidence from outside New Zealand, for a New Zealand proceeding; or (b) obtain evidence within New Zealand, for an overseas proceeding. This section discusses the practical issues involved in each of those scenarios. A number of international conventions are relevant to these evidential issues. The Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (1970) is the major relevant international convention. While most of New Zealand's major trading partners are parties, including Australia, China, England, most EU and EFT A countries, and the United States, New Zealand is not (see http://www.hcch.net/ for a list of parties to the Convention). There are strong arguments for New Zealand to accede to this Convention, and it seems likely that this will occur in the medium term. The main advantage of acceding to this treaty for New Zealand would be improved access to the taking of evidence in civilian countries. By and large, the common law tradition regards the gathering of evidence as a matter for the parties to a proceeding. Typically, common law countries will permit consensual arrangements to be made for gathering evidence. By contrast, civil law countries generally treat the gathering of evidence as an official act, to be carried out on behalf of the state as an exercise of its judicial sovereignty. As a result they tightly control the taking of evidence within their jurisdiction. Thus, in many civilian countries, prior permission from the local authorities is required to take evidence even from a willing witness. Nor will all countries provide judicial assistance to others, absent a relevant treaty providing for such assistance. 168 Although New Zealand is not yet a party to the Convention, Subpart 2 of Part 4 of the Evidence Act 2006, which deals with evidence for use in civil proceedings overseas and evidence obtained overseas for use in civil proceedings in the High Court was enacted to enable New Zealand to become a party to the Convention: Departmental Report for the Justice and Electoral Committee 2006, cited in Mahoney and others The Evidence Act 2006: Act & Analysis (2nd ed, Thomson Reuters, Wellington, 2010) at 517.

7.1 Obtaining evidence from outside New Zealand for a New Zealand proceeding The general starting point in relation to the taking of evidence abroad is that a New Zealand court cannot, on its own, compel the attendance of a person at trial for the purpose of giving evidence, if that person is not within New Zealand's jurisdiction. The appropriate course for obtaining evidence from outside New Zealand will usually depend on two issues: (a) whether the witness will give evidence voluntarily or not; and 167

,See e.g. Controller & Auditor-CJeneral v Davison [ 1996] 2 NZLR 278, 295 (CA); Brannigan v Davison [ 1997] l NZLR 140 (PC) (the Wmebox ltt1gation).

102

168

For further discussion of obtaining evidence abroad see Dicey at paras 8-058 - 8-067.

103

Goddard and Mclachlan • Obtaining Evidence in Cross-Border Litigation NZLS CLE Seminar• Private International Law

(b) the attitude of the particular foreign country concerned to the process proposed.

169

It is important to consider these issues well before trial, given that some of the procedures

will take considerable time to arrange. (a)

(c) the potential impact of the use of the technology on the effective maintenance of the rights of other parties to the proceeding, including(i) the ability to assess the credibility of witnesses and the reliability of evidence presented to the court; and (ii) the level of contact with other participants; (d) any other relevant matters.

Willing witnesses

Ideally, it will be possible to persuade an overseas witness that they should travel to New Zealand to give evidence in person. Where a person is prepared to give evidence but will not agree to appear at a trial in New Zealand to do so, their evidence might still be given at the trial, but by video link. Sometimes, the court might sit and hear the evidence in the country in which the foreign witness is located, effectively as part of the trial. Alternatively, the evidence might be taken in advance of the trial, through an "examiner" or a foreign court, and provided as a deposition at the trial. Finally, while there is of course a presumption that evidence will be given orally, 170 there are exceptions and in some cases affidavit evidence (without cross-examination) will be acceptable. 171

The decision-maker must also take into account whether the parties consent to the use of 174 AVL for that witness.

A number of New Zealand statutes may be relevant to the process by which a willing witness outside New Zealand gives evidence for use in a New Zealand proceeding, including ss 103 and 188(1) of the Evidence Act 2006, and the Courts (Remote Participation) Act 2010.

Section 103 of the Evidence Act 2006 provides that the Court can give directions for evidence to be given in an alternative way pursuant to s 105 of the Act. Such directions can be given of the Court's own motion or on the application of a party. One ?f the alternative ways of giving evidence provided for in s 105 of the Evidenc~ Act_is that evidence can be given "from an appropriate place outside the courtroom, either m New Zealand or elsewhere" (s 105(l)(a)(ii)).

Evidence by video link

If a witness consents to give evidence, but it is impossible or inconvenient for the witness to come to New Zealand for the trial, that evidence may be able to be given by video link from abroad. This is often the most convenient way for evidence to be taken from a person overseas, especially if the evidence is not very controversial.

The 2010 Act supplements, and does not limit, the provisions in the Evidence ~~t 2006 which provide for evidence to be given in an alternative way (ie other than by g1vi~g oral evidence in the New Zealand court): sees 16 of the 2010 Act, ands 102A of the Evidence Act which provides that nothing in the 2010 Act affects or limits th~ abil_ity of a party_ to apply under section 103(1) of the Evidence Act for evidence to be given m an alternative way or for a Judge to make directions under that provision.

Section 103(3) sets out a number of grounds on which a court may give a direction that evidence is to be given in an alternative way. These include: (i) the absence or likely absence of the witness from New Zealand: (j) any other ground likely to promote the purpose of the Act.

Section 103(4) sets out a list of mandatory considerations that the Court must take into account in making a direction under s 103: Courts (Remote Participation) Act 2010

(a) the need to ensure-

The Courts (Remote Participation) Act 2010 provides for audio-visual links (AVL) to be used in New Zealand civil and criminal proceedings if specified criteria are met. The Act expressly contemplates that it may be used where a person gives evidence from a place outside New Zealand: sees 14(2).

(i)

the fairness of the proceeding; and

(ii)

in a criminal proceeding, that there is a fair trial; and

(b) the views of the witness and-

A judicial officer or Registrar may make a determination about the use of AVL either on their own motion or on the application of any participant in the proceeding. 172 The following criteria must be taken into account: 173

(i)

the need to minimise the stress on the witness; and

(ii)

in a criminal proceeding, the need to promote the recovery of a complainant from the alleged offence; and

(c) any other factor that is relevant to the just determination of the proceeding.

(a) the nature of the proceeding; (b) the availability and quality of the technology that is to be used; 169

The legal section of the Ministry of Foreign Affairs & Trade can usually assist with advice on the latter point, and this is an inquiry worth making given the range of stances possible. Note also the existence of a specific regime between New Zealand and Australia, which is discussed in detail below 1m . · See High Court Rule 9.51, District Court Rule 12.1.1 17 1 See High Court Rules 9.51, 9.57, 9.74, District Court Rules 12.1.1 , 12.1.4, 12.5.6. Even more rarely, evidence may be given simply by an agreed statement of facts (High Court Rule 9.57, District Courts Rule 12.1.4). 172 Courts Remote Participation Act, s 7(2). 1n . . . . Courts Remote Part1c1pat1on Act, s 7(3) cross-referencing s 5.

104

In Deutsche Finance New Zealand Ltd v Commissioner of Inland Revenue (2007) 18 PRNZ 710 at [24]-[25], Stevens J discussed the approach that should be_take~ to ss 103 and 104 where a witness is overseas (the case does not discuss the relat10nsh1p of these provisions to the 2010 Act, which had not been enacted at that time): In deciding the application in respect of each witness, the first inqu~-is whether one of the grounds in s 103(3) has been made out. Counsel for the plamtiffs_ accept th_at, once any such ground is made out, the Court will carry out a balancmg exercise

174

Courts Remote Participation Act, s 7(3).

105

Goddard and Mclachlan • Obtaining Evidence in Cross-Border Litigation NZLS CLE Seminar• Private International Law

whereby the ground(s) established and other applicable factors from s 103(3) will be considered, bearing in mind the matters to which regard must be had as set out in s 103(4)(a) to (c). Indeed, counsel for the defendant did not really challenge this approach. Such balancing will involve consideration of any expense, stress, and inconvenience in bringing the witness to New Zealand in the present day and age where alternative modes of giving evidence are readily and reliably available, the importance of the evidence the witness is proposing to give, the desirability of hearings being in open Court with the witness being present, and the broader concerns of natural justice and fairness for all parties. If the conclusion is that it is not necessary to bring one or both witnesses to New Zealand, then a further question is whether the Court can be satisfied that appropriate practical arrangements can be made to, amongst other things, help ensure veracity and that there are legal sanctions in place for perjury. A finding that such safeguards cannot reliably be put in place may ultimately override any conclusion under the balancing process and result in it being necessary for the witness to come to New Zealand to give evidence.

In Deutsche Finance Stevens J endorsed the benefits of the use of video links for the giving of evidence by witnesses abroad. His Honour observed that use of technology such as video link communications may well contribute to the just, speedy, and inexpensive conduct of litigation, noting that such technology enables litigants overseas to be spared th~ cost and, in some circumstances, the stress of travelling significant distances to give evidence. It also promotes access to justice for a party proposing to call a witness who may not be able to give evidence if required to fund or travel long distances to make an appearance in person. 175 In Inverness Medical Innovations Inc v MDS Diagnostics Ltd HC Auckland CIV-2007404-748, 15 May 2009, Hugh Williams J discussed the growing use of applications for leave to call the evidence of overseas witnesses by way of video link. While acknowledging that the starting point for determining such applications had to be the Evidence Act 2006, the Judge noted that rr 9.51 and 9.67 of the High Court Rules, althoug_h limited to evidence being given from Australia, could be seen to provide somethmg of a template for evidence given by video link from other jurisdictions. The 2010 Act now provides a further and more detailed template for these matters.

Evidence by deposition

Section 188(1) of the Evidence Act and rr 9.17 -9.29 of the High Court Rules set out the regime under which a party to a New Zealand proceeding may apply to the High Court for an order that: (a) a person is examined before an "examiner" (being a judge, registrar, deputy-registrar or other person appointed by the court); or (b) a letter of request is sent to judicial authorities in the relevant country asking them to take the evidence of a person for use in New Zealand proceedings. 176

175 116

At[l5]. N o eq~1va . Ient prov1s1ons .. exist in the District Court Rules, as far as they apply to persons abroad, although s 55 of the D1stnct C~urts Act l 947 does contemplate the District Courts seeking evidence from abroad. In these circumstances, 1t seems likely that District Courts Rule l. l 3 could be invoked to support use of the procedure under the High Court rules by analogy.

106

A significant change that has been introduced by r 9 .17 of the High Court Rules is that the regime now applies to both trials and interlocutory proceedings. The previous regime did not extend to interlocutory applications. Where the witness is willing to give evidence, a letter of request will only be necessary if the law of the foreign country requires it. The court has a discretion whether to make the order sought. The court's primary concern will be whether or not justice requires such an order to be made (Ra Ora Stud Ltd v Oliver (1991) 5 PRNZ 132). Whose evidence is being sought to be taken abroad will be important. A plaintiff can expect a more rigorous examination of an application for his or her own evidence to be taken abroad than a defendant, as the plaintiff has usually chosen the forum (Wong Dao v Khana Bhana [1933] NZLR 1455 (CA); Platt v Platt [1948] NZLR 5); although see Equiticorp Holdings Ltd v Cheah (1992) 6 PRNZ 199 where the defenda~t's fea~ of unfavourable questioning by New Zealand authorities was found to be an msuffic1ent ground for granting the application. 177 An application in relation to a non-party witness stands a good chance (Hill v Innes [1957] NZLR 1016). In assessing an application, the court will consider the materiality of the evidence, the reasons for the witness's inability to attend, any delay in application, whether the application is brought in good faith, and the importance (or otherwise) of crossexamination. In Midland Metals, Master Venning concluded that the application was not brought in good faith, to the extent it sought to circumvent the rule against requiring discovery against a (foreign resident) non-party. The need for cross-examination has been critical in the refusal of orders for the taking of evidence abroad (see Platt v Platt [1948] NZLR 5; Williams v Sievers [1952] NZLR 591; and Keith v TVNZ (1992) 6 PRNZ 405). The availability of local counsel to crossexamine was influential in Wong Dao v Khana Bhana [1933] NZLR 1455 (CA) (in Hong Kong) and Hill v Innes Ltd [1957] NZLR 1016 (in Fiji). However, the Court of ~pp~al has since indicated some greater tolerance in relation to the absence of cross-exammat10n (Brych v Medical Council of NZ [1976] 1 NZLR 204 (CA)), recognising that many civil law countries could otherwise be automatically excluded on this basis. This is also balanced by the trial court's ability to determine the weight ultimately to be given to the evidence.

It seems likely that the "examiner" process will fall into disuse as the video link option is increasingly available, given the relative convenience and cost, and the ability for vi~eo link evidence to occur during, rather than in advance of, the trial. However, the exammer process will remain useful where the "examiner" is the trial judge, and effectively the entire court relocates to a foreign country in order to take evidence (eg Clear Communications Ltd v Telecom Corporation of NZ Ltd (1992) 5 TCLR 167, where the Court travelled to Los Angeles; and Ra Ora Stud Ltd v Oliver (1991) 5 PRNZ 132, where

177

However, the rigour of the earlier cases may be somewhat relaxed in the light of technological advances and _the New Zealand courts ' willingness in some cases to regard to location of witnesses as neutral m forum conveniens arguments (see Bayswater Marine Ltd v NZ! Insurance Lid HC Auckland CP 185/97 and AD 785 , 20 May 1998 at 20).

107

Goddard and Mclachlan • Obtaining Evidence in Cross-Border Litigation

NZLS CLE Seminar• Private International Law

189

the Court travelled to Sydney). 178 It should be noted that the applicant is likely to have to bear the costs in this event (see Midland Metals and Ra Ora Stud).

If a deponent is abroad, the requirements of High Court Rules 9.87 and 9.88 must be met or the affidavit may not be read or used in the proceeding. An affidavit may be sworn 190 in a place outside New Zealand before:

The High Court Rules prescribe the documents that are to be provided to an examiner and the procedure an examiner is to follow in examination of a witness (including in relation I79 to any objections to a question being put in the examination). The Rules also permit the examination of additional persons, where the parties to the proceeding consent. 180 The Rules include a form in which the examiner's report may be made. 181 Rule 9.24 contemplates that a deposition taken in this context will be admitted at trial subject to any objection on the ground of admissibility. Therefore, it would be prudent for any party concerned about admissibility to raise such an objection at the examination stage. I82

(a) a Commissioner of the High Court of New Zealand who has authority in that place; or

The letter of request process may be used in relation to foreign countries whether or not New Zealand has a relevant convention in place in relation to the taking of evidence in that country for use in New Zealand. Where there is no convention, however, the foreign country may not be willing to act on letters of request from New Zealand. If there is a convention with a relevant country, High Court Rules 9.26 to 9.28 apply, subject to any special provisions contained in the convention. I83 A list of countries to which conventions apply is set out in the commentary to r 9.25 in McGechan on Procedure. As that text notes, it would be prudent to consult with the legal section of the Ministry of Foreign Affairs and Trade before relying on the existence of a convention, in particular in relation to countries where political changes have occurred. Rule 9 .26 sets out the procedure for the issue of a letter of request. A draft letter of request (for which there is no prescribed form) together with the questions to be answered and (if required by a convention) a translation of these documents into an appropriate language must be lodged in the court. McGechan on Procedure notes that where the country concerned has diplomatic representation in New Zealand, prior consultation on the form of the letter (via MFAT) would be sensible. I84 In addition, an undertaking must be given to be responsible for all expenses incurred by the court or by any person at the request of the court. These may be considerable. Alternatively, the Registrar may require security in lieu of such an undertaking. Non-compliance with an undertaking in relation to expenses can result in a stay of the proceeding in relation to any claim for relief by the relevant party, or in its statement of defence being struck out. I85

Foreign affidavits

Issues of fact are generally determined at trial on evidence given orally and tested by cross-examination. 186 But the court has a discretion to order evidence to be given by affidavit at trial, 187 and affidavit evidence is usual in interlocutory applications. 188 178

179

180 18 1 182 183 184 185 186

In Ra Ora Stud, the trial judge was actually appointed as examiner. It is not plain whether or not this was the case in Clear Communications. Note that High Court Rule I 0.2 contemplates an adjournment of trial to a different place, as does High Court Rule 29.16(2)(e) in relation to Commercial List matters. It is conceivable that these powers could be used in some cases instead of r 9. 17. High Court Rules 9.19, 9.20. Note that the High Court is empowered to decide the validity of any objections (r 9.22(c)). High Court Rule 9.21. High Court Rule 9.23. See Robinson & Co v Davies & Co ( 1879) 5 QBD 26 High Court Rule 9.25 McGechan on Procedure, HR 9.26 .01 High Court Rule 9.28 See High Court Rule 9.51 and District Courts Rule 12.1.1

108

(b) a person who is authorised to administer oaths by the law of that place; or (c) a person who is authorised by a Judge to administer the oath required for the affidavit. It is important to ensure that foreign affidavits contain statements in the jurat or body of the affidavit as to the authority under local laws of the person taking the oath to do so. It is prudent to actually draft the necessary words and provide them to the deponent or foreign agent, in order to ensure these requirements are met.

In some cases it may be necessary to check the requirements of local laws in relation to the administration of an oath for the purposes of swearing an affidavit for use in foreign proceedings. It will almost invariably be lawful for such oaths to be a~inistered by New Zealand diplomatic or consular representatives, where other opt10ns are not available. (b)

Unwilling witnesses

A New Zealand court cannot effectively compel a person to give evidence if that person is not within New Zealand's jurisdiction. If the person is not prepared to give evidence voluntarily, it can be taken compulsorily only through the assistan~e of th~ releva~t overseas authority and provided as a deposition at trial (with the exception of witnesses m Australia - the trans-Tasman regime is discussed separately below). If a witness will not 191 co-operate a letter of request will be essential. It is prudent to make an early assessmen~ as to whether the letter of request process will be needed, given the length of time it can take to complete the procedure. (c)

"Trans-Tasman" arrangements

Subpart 1 of Part 4 of the Evidence Act 2006 (together with Australia's Evidence and Procedure (NZ) Act 1994 (Cth) establishes a regime under which New Zealand and Australia have significantly reduced the procedural hurdles for litigants in each country to I92 obtain evidence from witnesses located in the other country. These provisions in the Evidence Act 2006 largely replicate the previous provisions of the Evidence Amendment Act 1994. This regime will not be affected by the commencement of the TTP A. The TTP A will only govern remote appearances that are not related to the giving of evidence; the examination of a person giving remote evidence;_ or the making of submissions in relation to remote evidence. Accordingly, the TTP A will not affect, but 193 rather will complement, subpart 1 of Part 4 of the Evidence Act 2006.

187 188 189 190 191 192 193

See High Court Rule 9.56; District Courts Rule 12.1.3 See High Court Rules 7.27 -7.32. District Courts Rules 3.70.12 and 3.70.13. See High Court Rule 9.86. Refer to the earlier discussion under the heading "Evidence by deposition". See ss 150-181 of the Evidence Act 2006, High Court Rules 9.58 - 9.67 and District Court Rules 12.4.1 - 12.4.6. Trans- Tasman Proceedings Act 2010, s 35

109

NZLS CLE Seminar• Private International Law Goddard and Mclachlan • Obtaining Evidence in Cross-Border Litigation

The following points are significant in obtaining evidence from a witness in Australia: •

With the (conditional, if appropriate) leave of the High Court, a New Zealand subpoena may be served on a witness in Australia (a judge must take into account the significance of the evidence to be given plus the cost and inconvenience of this and any alternative process) (s 154).

•

Such a subpoena may require the witness to give evidence and/or produce a document or thing at a place in New Zealand or Australia (s 155).

•

Subject to any directions as to service made under s 154, such a subpoena must be served (in Australia) in accordance with New Zealand law, attaching a prescribed statement of rights and information about the way in which an application may be made to have the subpoena set aside (s 156). 194

•

Compli~nce ~ith the subpoena will only be required where reasonable expenses of complymg with the subpoena have been provided at the time or service or a reasonable time before compliance is required (s 157).

•

A witness in Australia who elects to comply with the subpoena to produce a document or thing by producing the document or thing at the registry of an Australian court 195 is not required to co~ply with the subpoena unless the reasonable expense of producing the document or thmg and the expenses of transmission to the New Zealand court are paid at the time or service or a reasonable time before compliance is required (s 157).

•

Additional expenses incurred by a witness in complying with the subpoena may also be claimed (s 158).

• • •

•

A_ witness on whom a New Zealand subpoena is served in Australia may apply to the High Court to set the subpoena aside on specified grounds (s 160(1) and High Court Rules 9.62 - 9.66). If a witness fails to comply with a subpoena, the New Zealand court that issued the subpoena may give a certificate stating that the witness failed to comply (s 161). Failure to comply with the subpoena is treated as a contempt of the Federal Court of Australia and is punishable accordingly (ss 20 and 21 Evidence and Procedure (New Zealand) Act 1994 (Cth);). 196

The New Zealand Court can receive evidence and submissions by video link and telephone conference from Australia, for which the applicant will usually pay (s 168 r 9.67). Australian counsel can appear for these purposes (s 172 and r 9.67). '

The Rules of both the High Court and the District Court now provide for these matters: 197

•

Applica~ions to t~e High Court for leave to serve a New Zealand subpoena on a witness m_ Australia are made without notice by originating application, accompanied by a detatled affidavit which must include discussion of whether consideration has been given to requiring evidence to be given by video link or telephone conference rather than requiring attendance at the New Zealand court, transport options and costs for such attendance, and whether there is any fact or circumstance known to the

194 I dd . . . h Id n a 1t1on, service s ou comply with the requirements of s 19 of the Evidence and Procedure (New Zealand) Act 1994 (Cth). 195 "Australian court" is defined bys 150 to include a tribunal declared by the Minister of Justice under section 152 to be an Australian court. 196 "N ew Zealand court" is defined by s 150 to include a tribunal declared by the Minister of Justice under section 152 to be a New Zealand court 197 . h 8 1g Court Rules 9.58 - 9.67; District Courts Rules 12.4.1 - 12.3.5.

110

applicant that may constitute a ground for setting the subpoena aside under s 160 of the Evidence Act 2006: see High Court Rule 9.60. •

There are separate prescribed forms depending on whether testimony or documents (or both) are being subpoenaed (see High Court Rule 9.59). 198

•

In the case of a body corporate, the judge may make directions for service "in such manner as the judge directs" (High Court Rule 9.60(3)).

•

An application to set aside a New Zealand subpoena served in Australia may be dealt with on the papers, if neither party objects, or by video link or telephone conference (the subpoenaed applicant can require this) (High Court Rule 9.64).

At present the statutory regime requires all applications for leave to serve a New Zealand subpoena on a witness in Australia to be made in the High Court, even if the evidence is sought for a District Court case. 199 This means that the video link and telephone conference processes can be used in District Court proceedings where a witness is willing to give evidence, but if a subpoena is required, the High Court must be involved. This will no longer be the case after the TTP A comes into force, as it amends the Evidence Act 2006 to provide that the court that issues the subpoena is also able to grant leave for its service in Australia. In addition, the District Court will be able to authorise the service in Australia of subpoenas issued by any New Zealand tribunal to which the trans-Tasman evidence regime is extended under s 152. There is some authority that the regime is limited to evidence to be given at trial. In A v Bottrill (1999) 14 PRNZ 94, the High Court concluded that there was no jurisdiction to serve a subpoena in Australia in relation to giving oral evidence at an interlocutory hearing. The Court based its conclusion on the cross reference contained in rr 9.59 to 9.52 (referring to subpoenas requiring the attendance of witnesses at the trial), as well as the overall scheme of the High Court Rules which separates out evidence on interlocutory applications from evidence at trial. In any event the Court was satisfied that it was not necessary for oral evidence to be given at the interlocutory application in question. However, the Court did not exclude the possibility that the High Court has inherent jurisdiction to use this subpoena process for oral evidence on an interlocutory application. In European Stone Surfaces Ltd v Italian Surfaces NZ Ltd (2006) 18 PRNZ 165, the applicant who sought to adduce evidence from an Australian resident to support an application for further and better discovery accepted that the authority of A v Bottrill (1999) 14 PRNZ 94 precluded the issue of a subpoena under r 9.59. Rodney Hansen J was not required to determine the point that had been left open in Bottrill and refrained from venturing a view, apart from making the point that if jurisdiction did exist, the interests of justice would be the paramount consideration in deciding whether to exercise it. The reasoning in A v Bottrill is not persuasive, and the language of s 168 of the Evidence Act 2006 is not limited in this way. The better view is that the trans-Tasman regime can be used to require oral evidence to be given at any stage of a proceeding, provided that the usual criteria are met. The earlier case law should not deter efforts to obtain leave to serve a subpoena on a witness in Australia for evidence in relation to an interlocutory matter. 200 198 District Courts Rule 12.4.2 199 See District Court Rule 12.4.6 which provides that leave to issue a subpoena for service in Australia must be obtained from the High Court (section 154 of the Evidence Act 2006 and HCR 9.60). 200 Note also the extension (at least in England) of the use of a subpoena duces tecum to obtain compulsory access to documents pre-trial (see Khanna v Lovell White and Durrant [1995] I WLR 121; [1994] 4 All ER 267, and

111

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Obtaining Evidence in Cross-Border Litigation

In Plumley v Ellis [1997] 2 NZLR 579; (1997) 10 PRNZ 492, the Court concluded that rather than using the more complex letter of request approach to have an arbitrator travel to Melbourne to take evidence as an "examiner", it was appropriate to use a subpoena under the_ "trans-Tasman" regime. The Court was prepared to take a broad interpretation o~ the E~idence A~endment Act 1994 to conclude that the power to issue a subpoena to a witness m _Au~traha extends to the power of the Court to issue a subpoena under s 19(1) of the Arbitration Act 1908. Under the Arbitration Act 1996, art 27 of the First Schedule empo~ers th~ New Zealand courts on application by the arbitral tribunal or a party (with the arbitral tribunal's approval), to make orders within its general competence to facilitate the takirlg of evidence before the arbitral tribunal, including outside New Zealand (art 27(2)(c)). In Plumley v Ellis, the Court suggested that a New Zealand subpoena issued under this regime could not require a person in Australia to give evidence by telephone or video link from Australia without that person's consent. This assumption was also made in Jess v Webber (1998) 11 PRNZ 598. Such an assumption was also apparent in the Federal Court of Australi~'s disc~ssion of the Australian Evidence and Procedure (New Zealand) Act 1994 (Cth) m Corrigan v Commvault Systems (Australia) Pty Ltd [2011] FCA 107. This suggest~d r_estriction is not expressly provided for in the New Zealand legislation, and would s1gmficantly reduce its utility. The better view is that there is no such restriction, an~ that a Ne~ Zealand court can issue a subpoena requiring a person to attend a specified place m Australia to give evidence by electronic link with the Australian court being able to enforce compliance if necessary under the Austr'a!ian 1994 201 Act. This approach is confirmed by the wording of High Court Rule 9.60(2)(c), which contemplates "requiring" the witness to testify by video link or telephone conference. In the recent decision in Fickling Ltd v Currie HC Auckland CIV-2011-404-3355 23 Jun~ 2011,_ consideration was given to whether a subpoena should be issued requiring 'oral testimony m person rather than video-link. In that case, the Australian witness was not a witness w~thin the control of defendants, and his testimony was expected to be highly controversial._ 'Y?ata J accepted that cross-examination was likely to take several days and that credibility would be a matter on which assessment would need to be made at trial. ~urther, in light of the anticipated heavy reliance on exhibits and other documentary material (to the extent that protracted cross-examination would be very difficult to manage by way_ of video conference), Whata J considered that the efficient and just conduct of the tnal called for oral testimony in person rather than by way of video link. Pa~ IA _of the ~udicature Act 1908 and Part 28 of the High Court Rules establish a special regime m relat10n to proceedings arising under the provisions of the Commerce Act 1986 and the Trade Practices Act 1974 (Cth) dealing with "trans-Tasman" competition matters. (d)

physically located. As Hoffmann J has put it: "If you join the game you must play according to the local rules. " 202 Conversely, it is very unlikely that a New Zealand court would require a foreign resident non-party to give discovery, at least where that person is opposed to such an order. 203 To the writers' knowledge, no New Zealand court has made such an order. While the High Court Rules give the court power to order discovery from a non-party (r 8.20) it is implicit that the non-party is within the court's jurisdiction. Rules 6.27 and 6.28, which deal with service out of New Zealand, refer to service of proceedings on an intended party. Even the explicit arrangements between New Zealand and Australia for assistance c-. in procedural matters do not exten d as 1ar as d"iscovery. 204 That position is consistent with English authority (Mackinnon v Donaldson Lufkin & Jenrette Securities Corp [1986] 1 All ER 653). In that case Hoffmann J, although allowing for the possibility that exceptional circumstances might justify such an "exorbitant order", set aside orders that purported to require a US bank to provide relevant documents in relation to a defendant's New York bank account. Hoffmann J proceeded on the basis that such orders, taking effect in New York, would infringe the sovereignty of the United States. 205 Sometimes, procedures that exist under the laws of foreign countries to enable evidence to be obtained for use abroad may also be able to be used to obtain discovery abroad for the purpose of New Zealand proceedings. (See the helpful discussion in Paul Matthews & Hodge Malek, Disclosure (3rd ed, Sweet & Maxwell, London, 2007) paras 2.57- 2.63 and in Dicey paras 8-071 - 8-072). As with New Zealand's own approach to such matters, foreign courts will generally decline to make orders for wide-ranging discovery for the purposes of New Zealand proceedings. 206 A not unusual situation where a party would like "offshore" non-party discovery is where the New Zealand defendant company is controlled by an overseas company, with key documentation held by that parent company. It remains to be seen how far a New Zealand court would go in this situation. In some cases it might be appropriate to join the parent company as a party. Alternatively, there is Australian authority (in the patents context) that the party entity may be directed to take steps to obtain access to and discover documents that are in the possession, power or control of the foreign (parent or related) entity, at least where it is shown that the party entity would normally expect to obtain documents on request (Sabre Corporation Pty Ltd v Russ Kalvin 's Hair Care Company 202 203

Provision of discovery from overseas persons, for New Zealand proceedings

Where a foreign entity is a party to New Zealand proceedings, they are liable, in the usual way, to discover documents in accordance with New Zealand law, wherever they are

204

205

201

discussion of the same in Perry v Molteno (1999) 13 PRNZ 546 at 551). See Evidence Act 2006 ss l 55 , 161, and 168 and compare ss 163-164, 173-175, 178, 180.

112

206

Mackinnon v Donaldson Lufkin & Jeanette Securities Corp [ 1986] I All ER 653 , 659 In Cedco Publishing Company v Hodder Moa Beckett Publishers Ltd & Anor HC Auckland CL 33/00, 29 May 200 I, the High Court ordered (it appears, pursuant to Rule 9.17) that a letter of request be sent to the District Court for the Northern District of California, asking that Court to order a non-party to discover, and provide for inspection, all relevant documents. Cedco had also sought the High Court's leave to apply directly to the Californian court for an order for discovery. The judgment notes that the High Court has no express statutory power to order discovery from a foreign non-party. The Court ordered that the non-party was to file an affidavit in the High Court attaching its verified list of documents. Cedco, as applicant, was required to meet the non-party's costs of compliance. Critically, the non-party did not object to providing discovery. There is no discussion in the judgment of the distinction between production of documents pursuant to a subpoena, and general discovery· See s 155 of the Evidence Act 2006 and note the definition of "subpoena" in s 150 (subpoena means a process that requires a person to give evidence or produce a document or thing but does not include a process that requires a person to produce a document in connection with discovery and inspection of documents). Hoffmann J noted that alternative remedies were available, namely the use of letters rogatory or through a direct application for disclosure in the New York Court. Mackinnon, and disclosure from third parties generally, is discussed in McLachlan, "The Jurisdictional Limits of Disclosure Orders in Transnational Fraud Litigation" ( I 998) 47 ICLQ 3, 26-33. See the discussion below on New Zealand ' s attitude to foreign requests for discovery.

113

Goddard and Mclachlan • Obtaining Evidence in Cross-Border Litigation NZLS CLE Seminar• Private International Law

(1993) 46 FCR 428, and see the discussion of the authorities in F Hoffmann-La Roche AG v Chiron Corp [2000] FCA 346). This is not to say that the production of particular documents cannot be obtained, using the subpoena procedures described earlier (either generally under the High Court Rules 9.17-9.29, or unde~ the "trans-Tasman" regime). And a practice has developed at least in England of exten?mg the use of a subpoena duces tecum to obtain compulsory access to documents pre-trial (se~ Kha~na v Lovell White and Durrant [1995] 1 WLR 121; [1994] 4 All ER 267, and the discuss10n of the that case in Perry v Molteno (1999) 13 PRNZ 546 at 551 and Av Bottrill (1999) 14 PRNZ 94 at [15]). !h~re_ c_an also be issues about the use of documents in proceedings in another Juris?ichon. ~ So.(t-Tech International Pty Limited v Ball (1990) 2 PRNZ 254, the Court modified the imph~d undertaking on discovery to allow the use in Australian proceedings of documents obtamed under an Anton Piller order in New Zealand. 207 However, the law in this area is developing, and the willingness of the courts internationally to assist with disclosure is discussed further in section 6.5 on interim relief.

(b)

Unwilling witnesses

Sections 184 and 185 of the Evidence Act 2006 set out a statutory regime which enables a High Court Judge to order the taking of evidence in New Zealand in respect of foreign proceedings. As the Court of Appeal observed in Hagaman v Fairbank (2010) 20 PRNZ 68, the legislative history of the Act indicates that these sections are based on the Evidence (Proceedings in Other Jurisdictions) Act 1975 (UK) and were intended to be consistent with the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. However, as noted above, New Zealand has yet to become a party to the Convention (see http://www.hcch.net/ for a list of current parties to the Convention). Section 184 of the Evidence Act provides that a High Court Judge may exercise the powers conferred by s 185(1) (to order any provision for the taking of evidence in New Zealand) if the Judge is satisfied that an application for the taking of evidence is made to implement a request issued by a foreign court and that the evidence to which the application relates is being obtained for the purposes of civil proceedings which are before the request court or are going to be instituted before the court.

7.2

Obtaining evidence within New Zealand, for an overseas proceeding

Once the Judge is so satisfied, an order can be made under s 185(1) for the taking of evidenc~ in New Zealand that i~ appropri_ate to. gi_ve. effect to the_ re~~0est in the application. Orders can be made to mclude, without hmitat10n, the followmg:

(a)

Willing witnesses

(a) the examination of witnesses, either orally or in writing at any agreed time or at any specified time and place:

There is_ no legal imp~diment ~n ~ew Z~aland to the taking of evidence for use in foreign ?roc~e?mgs. No official permission or mvolvement is required, provided that the witness 208 is willmg to_ give evi~ence and no question of compulsion arises. It will be up to the party procunng t~e evid_ence to ensure that the manner in which it is taken is acceptable to the c_ourt o~ arbitral ~ibunal_ where the evidence is to be used. This is an important ?ract~cal p~mt: you w~ll assist your foreign client considerably by ensuring that they identify theu local reqmrements at an early stage, and pass that information on to you.

(b) the production of documents: (c) the inspection, photographing, preservation, custody, or detention of any property: (d) the taking of samples of any property and the carrying out of any experiments on or with any property: (e) the medical examination of any person: (f) the taking and testing of samples of blood from any person.

Options might include arranging for the evidence of a witness present in New Zealand to be tak~n from abroa~ by means of telephone or video link (although it is expressly 209 au~honsed by statute m the case of Australian proceedings, that authorisation is not strictly speaking required).

An order cannot be made that requires steps that could not be taken by way of obtaining 211 evidence for civil proceedings in the High Court.

207

The Act ensures that orders cannot be made that interfere with the privilege accorded to witnesses in New Zealand. An order made under the Act cannot compel a witness to give evidence that he or she could not be compelled to give in civil proceedings in New 213 Zealand, or in the country of the requesting court.

See also _Bank of Crete SA v Kskotas_ and Ors (NZ) [ 1992] I WLR 919; [ 1993] I. All ER 748 (where the implied undertaking was modified) and Carrington v Sea World Australia Limited [1992] 2 Qd R 470 (where the implied undertaking was not released). 20s N or IS . _ther~ any objection to _an oath being administered in New Zealand for the purpose of foreign civil proceedings. O_aths and_ Declarations Act 1957, s 6(3). However, there will be no sanction under New Zealand Jaw if false evidence 1s given in proceedings in respect of which there is no legal basis for the administration of an oath. (A sanction may be imposed in the country in which the proceedings are being tried, if the witness becomes amenable to that _law (1e, by returning to that country) - _that _will depend on the laws of that country). This might be overcome by_ having the_w1tness declare the truth of their evidence - see the discussion in relation to willing witnesses giving evidence by video link for use in New Zealand proceedings. 209 See s 173 of the Evidence Act 2006. Where evidence is given in New Zealand by telephone or video link for the purpose of Australian proceedings, the eviden_ce is treated as evidence given on oath in a judicial proceeding for the purposes of s I 08 of the Cnmes Act 1961, which relates to the offence of perjury (s 78 of the Evidence Act 2006).

114

The Court is prohibited from making discovery orders, apart from orders requiring the production of "particular documents" that appear to be in the person's possession, . 212 custody or power an d relevant to the procee dmgs.

In Hagaman v Fairbank, the appellant appealed from a High Court judgment that ordered that evidence should be taken in New Zealand for use in matrimonial proceedings that 210 211 212 213

Evidence Act 2006, s Evidence Act 2006, s Evidence Act 2006, s Evidence Act 2006, s

185(2) 185(3) 185(5) 186

115

Goddard and Mclachlan • Obtaining Evidence in Cross-Border Litigation NZLS CLE Seminar • Private International Law

had been brought against the appellant in California. The issue on appeal was whether the Californian court was requesting assistance in eliciting evidence for a trial, or for an investigatory inquiry. The Court of Appeal considered that the applicable principles in determining such a request were those discussed by the United Kingdom Court of Appeal in relation to corresponding United Kingdom legislation in First American Corporation v Zayed [1999] 1 WLR 1154. In First American Corporation, Sir Richard Scott said that the court receiving the request was required to look at the issue of the relevance of the requested testimony, leaving to the foreign court, in all but the clearest cases, the decision as to whether particular answers, or answers on particular topics, would constitute relevant admissible evidence.

in relation to "particular documents" has been met will be guided by the earlier case law that indicated that the principles to be applied would be those relevant to a subpoena duces tecum. There is also as discussed above, the "trans-Tasman" regime with its 2sf If-contained 1 procedures fo; compelling production of documents or things by subpoena. See generally Dicey paras 8-059 to 8-075 (but ~ote that unlike the UK, New Zealand has not yet acceded to the Hague Evidence Convent10n).

In discussing First American Corporation, the New Zealand Court of Appeal said: 214 The approach to be taken was summarised as follows: " . . . ask first whether the intended witnesses can reasonably be expected to have relevant evidence to give on the topics mentioned in the amended schedule of requested testimony, and second whether the intention underlying the formulation of those topics is an intention to obtain evidence for use at the trial or is some other investigatory, and therefore impermissible intention. " Sir Richard Scott said the other relevant considerations were first, the importance of comity, and secondly, the need to protect witnesses from an oppressive request.

In the case at hand, the Court of Appeal acknowledged that questions of comity were important in relation to letters of request, and noted that similar provisions existed under the California Code of Civil Procedure. However, the Court also acknowledged that it was necessary to be satisfied that the New Zealand statutory tests for admissibility of evidence were met. The Court noted that s 7 of the Evidence Act required consideration, as it had been some time since the parties' separation and therefore questions of relevance came into the occasion. But the Court upheld the approach taken by the High Court that in circumstances where the evidence may prove or disprove something relevant to the foreign proceeding, the threshold was met. The Court also noted that whether the orders sought may be oppressive is a factor that should be weighed in the exercise of the judge's discretion in making an order for the taking of evidence in New Zealand. The matters that were identified as potentially oppressive included the costs and expenses incurred by potential witnesses, a possible ulterior motive, such as where witnesses were potential defendants in criminal proceedings, and an unduly wide request. (c)

Provision of discovery from New Zealand, for overseas proceedings

As noted above, under s 185(5) of the Evidence Act the Court is prohibited from making discovery orders apart from orders requiring the production of "particular documents" that appear to be in the person's possession, custody or power and relevant to the proceedings. This provision reflects the case law that had developed under the Evidence Act 1908 (see eg Perry v Molteno (1999) 13 PRNZ 546). It has also been suggested in Richard Mahoney and others The Evidence Act 2006: Act and Analysis (2nd ed, Thomson Reuters, Wellington, 2010) at 521 that the court's assessment of whether the particularity standard 2 15 2 14

Hagaman v Fairbank (20 I0) 20 PRNZ 68 at [37-38]

116

Sections 163 - 167 of the Evidence Act 2006 provide for the service of Au~tralian_ subpoenas in New Zealand. The Evidence and Procedure (New Zealand) Act 1994 (Cth) provides the Australian leg1slative context.

117

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • What Law Will th~ Court Apply?

8. 8.1

WHAT LAW WILL THE COURT APPLY?

Outline

A New Zealand court will decide an issue before it by applying New Zealand law unless a party pleads that the issue ought to be determined in accordance with the law of another country (as to which see section 3 above), and the court finds that this is required by New Zealand's choice of law rules. This section considers the circumstances in which a New Zealand court will apply foreign law to an issue, and how it goes about determining which law to apply. The principal questions considered are: (a) the substance/procedure distinction; (b) characterisation of issues and connecting factors; (c) exclusion of foreign law; (d) overriding New Zealand statutes; and, (e) renvoi.

8.2

The substance/procedure distinction

Where an action is brought in New Zealand, all matters of procedure are governed by New Zealand law (the lex fori) even if the issues of substance are governed by foreign law. Thus the questions of how proceedings are commenced, what tribunal will hear them, what evidence is admissible and how it may be given, and what rights of appeal are available, will all be governed by New Zealand law. Any other rule would be impractical, at least so far as the basic rules for the conduct of litigation are concerned. There are however a number of matters which it is not so easy to classify as substantive or procedural. A useful overall test is that propounded by the High Court of Australia:2 16 Two guiding principles should be seen as lying behind the need to distinguish between substantive and procedural issues. First, litigants who resort to a court to obtain relief must take the court as they find it. ... [T]he plaintiff cannot ask that the courts of the forum adopt procedures or give remedies of a kind which their constituting statutes do not contemplate any more than the plaintiff can ask that the court apply any adjectival law other than the laws of the forum. Secondly, matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance, not with issues of procedure.

(a)

Limitation statutes

The classification of statutes of limitation for the purpose of Private International Law was previously a difficult and controversial issue. Fortunately, this question has now been clarified by statutory reform in New Zealand, which makes it clear that the issue is to be treated as substantive. 217 216

2 17

118

John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36, 203 CLR 503 at [99]. It is submitted that this general statement of principle may usefully be applied in New Zealand Private International Law, although the application of that principle on quantum of damage outside the Commonwealth of Australia is doubtful see section 8.2(b) below. It was reformed by statute in the United Kingdom by the Foreign Limitation Periods Act 1984.

119

Goddard and Mclachlan • What Law Will the Court Apply?

NZLS CLE Seminar• Private International Law

Section 55 of the Limitation Act 2010 now provides for how the limitation law of foreign countries applies in civil proceedings and arbitrations. It provides as follows : 55 How limitation law of foreign countries applied in civil proceedings and arbitrations

(1) Thjs section applies to a civil proceeding before a New Zealand court or tribunal, or to an arbitration, whenever the substantive law of a foreign country is to be applied in that proceeding or arbitration. (2) The limitation law of that foreign country is part of the substantive law of that country and must be applied accordingly in that proceeding or arbitration. (3) A New Zealand court or tribunal or arbitrator exercising, under subsection (2), a discretion under the limitation law of a foreign country must, so far as practicable, exercise it in the manner in which it is exercised in that foreign country. (4) If, under subsection (2), the limitation law of a foreign country must be applied in a proceeding or arbitration, the limitation law of New Zealand (other than this section) must not be applied in that proceeding or arbitration. (5) Subsection (4) does not apply insofar as the matter being determined in that proceeding or arbitration is one in the determination of which both the law of New Zealand and the law of a foreign country fall to be taken into account.

{c)

The classification of a presumption will depend upon the nature of the presumption. An irrebuttable presumption of law, which requires the decision maker to find a presumed fact in certain circumstances whether or not the contrary can be shown (such as the presumption of survivorship in s 3 of the Simultaneous Deaths Act 1958) is treated as a matter of substantive law. An irrebuttable presumption under New Zealand law will therefore be applied if and only if the relevant matter falls to be determined by New Zealand law, applying normal choice of law principles. Rebuttable presumptions of law (which apply unless the contrary is proved, such as the presumption of advancement) raise more difficult issues. Dicey suggests that rebuttable presumptions of law that apply in specific types of case to resolve particular legal issues, such as the presumption of advancement, are so closely connected with the substantive law in that context that they should be treated as rules of substance. The classification of general presumptions of law, which may be applied for a range of purposes (such as the common law presumption of death) is uncertain. See generally Dicey paras 7-029, 7-030, Cheshire & North at 88-89; Nygh at 342 - 345. {d)

This provision is subject to a public policy exception under s 56 for the limitation law of countries other than Australia in cases where the application of s 55 would cause undue hardship to a party to the proceedings. This exception is likely to be interpreted narrowly in line with the approach of the New Zealand courts to public policy exceptions in Private International Law more generally.218 {b)

Damages

It now seems to be established as a matter of common law that the law relating to damages is partly procedural and partly substantive. The distinction is between:

•

the question of what heads of damage are recoverable, and whether damage is too remote, which is a question of substance, governed by the law applicable to the merits of the claim (the lex causae); 219 and

•

the quantification of damages, which is a question of procedure, governed by the lex fori.

This distinction was re-examined in 2006 by the House of Lords in Harding v Wea/ands. 220 Their Lordships concluded that, although the availability of a head of damage was a question of substance, the assessment of the amount of damages was still to be treated as a question of procedure, governed by the lex fori. 22 1

218 2 19 220

22 1

Reeves v One World Challenge LLC [2006] 2 NZLR 184 (CA). Boys v Chaplin [1971] AC 356, 392-3. [2006] UKHL 32, [2007] 2 AC 1. Their Lordships noted (at [48] per Lord Hoffmann and [69] per Lord Rodger) that the decision of the High Court of Australia in Pfeiffer v Rogerson (2000) 203 CLR 503 to treat the quantum of damage as substantive in inter-state cases had not been extended by that Court to international cases, the question being expressly left open in Regie National des Usines Renault SA v Zhang [2002] HCA I0, 187 ALR I at [76] .

120

Presumptions

Parties to the action

The question of who is a proper party to an action is one which may in some cases be determined by the lex fori, and in others by the relevant substantive law. Some rules relating to parties are clearly procedural, such as the New Zealand rules relating to minors bringing proceedings by a litigation guardian ad litem (see rules 4.31 - 4.32 of the High Court Rules). Questions of who a claim is vested in, and who it may be brought against, will normally be treated as substantive. See generally Dicey paras 7-011-7-014, Cheshire & North at 89-92; Nygh at 345-347.

{e)

Set-off and counterclaim

Where a set-off has the effect of attaching to and extinguishing a plaintiffs claim, its existence is a matter of substance, to be determined by reference to the applicable substantive law. Otherwise, issues of set-off and counterclaim will probably be treated as procedural. See Dicey para 7-032, Cheshire & North at 95; Nygh at 349-350. {f)

Types of remedy

The only remedies that can be awarded by a New Zealand court are remedies available under New Zealand law. Where an action is brought in New Zealand on the basis of the law of another country, and the plaintiff would be entitled to a remedy in that country which is not available under New Zealand law, the New Zealand court will make some · other remedy available if it is appropriate to the nature of the claim. If no remedy of an appropriate kind is available at New Zealand law, the claim will fail (see Phrantzes v Argenti [1960] 2 QB 19; Dicey paras 7-006 to 010; Cheshire & North at 94-95; Nygh at 348-349). The approach of the New Zealand courts is to seek to take a liberal approach to finding appropriately comparable relief in order to give the best effect to the applicable law: Partnership Pacific Ltd v Mellsop (1991) 5 PRNZ 619; Rimini Ltd v Manning Management and Marketing Pty Ltd [2003] 3 NZLR 22.

121

NZLS CLE Seminar• Private International Law

(g)

Goddard and Mclachlan • What Law Will the Court Apply?

Property Law Act 2007

The Statute of Frauds, which is now replaced in New Zealand by the Property Law Act 2007 (ss 24 -27), is classified by English law as procedural (Dicey paras 7-019-020). How~ver, this classification has been extensively criticised, and its significance in English law much reduced by the Contracts (Applicable Law) Act 1990 (see Dicey op cit and Nygh at 341-342). There is no New Zealand authority on the classification for private international law purposes of the requirements of ss 24 -27 of the Property Law Act 2007. A New Zealand court _con~onted by this issue would not be obliged to follow the early English authority on this pomt, and could take the opportunity to apply a more sophisticated analysis. It would be unfortunate for a New Zealand court to hold, for example, that damages for bre~ch of an oral contract for sale of land in France entered into in France by two French parties (one of whom subsequently moved to New Zealand) could not be recovered in New Zealand, in a case where damages could be recovered in France: the effect of such a conclusion would be to defeat the plaintiff's substantive rights, and both parties' reasonable expectations as to those rights at the time the contract was entered into. (h)

Priorities

The question of priorities between unsecured creditors will often raise a number of procedural and substantive issues, discussed in Dicey paras 7-033 to 7-034, Cheshire & North at 92-94; Nygh at 347-348. Priority as between secured creditors turns on the creation of property rights, and the nature of those rights, and is a substantive issue.

8.3

Characterisation of issues, and connecting factors

"In any case which involves a foreign element", wrote Staughton LJ in MacMillan Inc v 22 Bishopsgate Trust (No 3/ "it may prove necessary to decide what system of law is to be applied, either to the case as a whole or to a particular issue or issues." The applicable law so determined is referred to as the lex causae. A typical choice of law rule, for example, is the rule which provides that succession to the movable property of a person who dies intestate is governed by the law of that person's domicile. The rule: (a) ~dentifies the class of cases to which it applies (succession to movable property on mtestacy); and (b) specifies the "connecting factor" which will determine which law applies (domicile).

succession to movables, by the law of the place where the deceased was domiciled when he died; and the interpretation of a contract, by what is described as its proper law.

(a)

Characterisation

The first of these stages raises the question of characterisation. In order to select the appropriate choice of law rule in relation to an issue, it is necessary to characterise that issue. For the most part, this process is an intuitive element in all legal reasoning (in which we characterise an issue as relating, for example, to contract or tort, or, more specifically to capacity to contract or the contractual defence to a tort claim). But there are three key points about this process to keep in mind which take on particular importance in Private International Law: 224 (a) Characterisation is directed at the particular issue (or issues) in dispute, not at the cause of action as a whole. Thus, in MacMillan, the plaintiff's claim was framed in restitution, but the English Court of Appeal decided that the issue in contention was title to the shares which were the subject-matter of the claim. This issue was to be governed by the lex situs of the shares at the time of their transfer, and not by the general choice of law rule for restitution. (b) Characterisation for the purpose of Private International Law does not necessarily proceed in terms of the same categories that are applied for domestic law purposes. Rather, the categories that are adopted aim to provide an international basis for comparison between different legal systems. Thus, in the example of a choice of law rule given above, reference was made to "movable property". In the field of private international law, the common law does not draw the familiar distinction between real and personal property. Instead, it adopts a classification similar to that of the civil law countries, distinguishing between movable and immovable property (see section 12.1 below). A similar basis for characterisation facilitates the development of choice of law rules in different countries which will lead to the same issues being determined by reference to the same system of law. (c) "The overall aim [of characterisation] is to identify the most appropriate law to govern a particular issue. The classes or categories of issue which the law recognises at the first stage are man-made, not natural. They have no inherent value, beyond their purpose in assisting to select the most appropriate law. A mechanistic application, without regard to the consequences, would conflict with the purpose for which they were conceived. They may require redefinition or modification, or new categories may have to be recognised ... " 225 For the special problems which arise in characterising statutory causes of action, see section 11 below.

Thus, as Staughton LJ went on to observe: 223 In finding the lex causae there are three stages. First, it is necessary to characterise the iss~e that is before ~he court. Is it for example about the formal validity of a marriage? Or rntestate success10n to movable property? Or interpretation of a contract?

The second sta~e is to_ select t~e rule of conflict of laws which lays down a connecting factor for the issue m question. Thus the formal validity of a marriage is to be determmed, for the most part, by the law of the place where it is celebrated; intestate 222 223

[ I 996] I WLR 387 at 39 I. Idem.

(b)

The second limb of the choice of law rule set out at the beginning of this section specified that the relevant connecting factor, where the issue is intestate succession to movables, is domicile.

224 225

122

Connecting factors

For more detailed discussion see Dicey chapter 2, Cheshire & North chapter 3. Raiffeisen Zentralbank Oslerreich AG v Five Star General Trading LLC [200 I] QB 825 (CA, per Mance LJ).

123

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • What Law Will the Court Apply?

Most connecting factors require little explanation: the relevant factor is often the location of some person, act or thing which can be established as a matter of fact. One very important connecting factor which is not so simple to determine is a person's domicile. Domicile is of great significance in the conflict of laws, particularly in the areas of family law and succession. It is of less importance in relation to commercial matters, and for that reason is not discussed in detail here. The Domicile Act 1976 reformed and partly codified the New Zealand law of domicile. For a discussion of that Act and the extent to which the common law is still relevant, see Laws NZ paras 81 - 105. ' The increased use of technology to make and perform cross-border contracts has, in recent years, posed some challenges for traditional connecting factors. As we will see in section 9, some elements of the choice of law process in the contractual context refer to the place where a contract is made, or the place where it is performed. Where a small business _based in New Zealand buys software online from a US provider, with mirror servers situated in many countries to facilitate downloading, where is the contract made? Where is it performed? Similar issues arise in connection with tort claims where traditional connecting factors look to the place where the wrongful act was done: ~here a hacker based in country A mounts a denial of service attack on a server in country B owned by a company based in country C, using computers in countries D to z, where is the wrongful act committed? The law is just beginning to grapple with these issues. Some commentators suggest that t~e courts should apply the traditional tests, with a "deemed" place of performance. The difficu~ty with this approach is that the original rationale for selection of the connecting factor is often absent where an artificial approach of this kind is invoked. 226 It seems likely t?at over the next few decades, more fundamental reappraisals of appropriate connectmg factors will be required in some classes of case. In the context of tort we will . . ' see ~n se~t10n. 10 that the recent focus on the system of law with the most significant relat10nsh1p with the occurrence and the parties may provide a foundation for developing a wo_rkable ~P?~o~ch to these issues. The path forward for contract law is less plain. Multilateral m1tlatlves have been proposed to achieve appropriate and consistent choice of law rules for cross-border contracts which make sense in the modem environment: but these are still quite some way off.

8.4

Exclusion of foreign law

Where the relevant choice of law rule indicates that an issue should be determined by a New Zealan? court in_ accordance with a rule of foreign law, the New Zealand court may nonetheless m some c1rcumstances decline to apply the rule of foreign law and apply New Zealand law. A New Zealand court will not apply a rule of foreign law directly or indirectly if that rule :

The impact of internationally mandatory rules of the forum will be discussed below at section 8.5(b). (a) Foreign public law

The rule against the enforcement of foreign penal, revenue or other public laws is really a rule which describes the outer limits of the kinds of actions involving foreign elements that it is possible for the New Zealand courts to entertain. Private international law provides a means for the enforcement of private law claims across national borders. It does not extend to the enforcement of public laws, for which special treaty arrangements are required. But the mere fact that the claim is brought by a foreign state or its agent does not necessarily entail that it has a public law character (jure imperii), since states may also act in a private law capacity (jure gestionis). The question of which laws of another state should be regarded as penal or revenue laws has already been discussed in section 5 .2(d) above, in connection with the enforcement of foreign judgments. See also Dicey paras 5-019 to 030, Cheshire & North at 126-130. The existence of a broader category of unenforceable "public laws" was accepted, but not applied, by the Court of Appeal in the course of the Spycatcher litigation (A-G (UK) v Wellington Newspapers Ltd [1988] 1 NZLR 129 at 173-175). 227 The Court was content to treat the claim for breach of confidence brought by the British Government against a former secret service agent as a private law claim, 228 a position also taken by the Court in the more recent decision on a similar claim in A-G for England and Wales v R [2002] 2 NZLR 91. In Mbasogo v Logo Ltd, 229 the English Court of Appeal determined that such a category existed, holding that "[t]he critical question is whether in bringing a claim, a claimant is doing an act which is of a sovereign character or which is done by virtue of sovereign authority; and whether the claim involves the exercise or assertion of a sovereign right." 230 Thus, in Mbasogo itself, the claim was held unenforceable as it amounted to an attempt to enforce in England a damages claim for a cost of putting down an attempted coup in Equatorial Guinea. However, in less political contexts, the courts in England, Australia and Canada have recently shown themselves to be more ready to treat claims of a regulatory or patrimonial character as being actionable, even if brought by the state or a state-appointed official, by focussing on the private law nature of the cause of action or object. This has been so for the actions of US regulatory agencies in Commonwealth courts to recover the fruits of a fraud or of insider trading, on the basis that the proceeds would be distributed to defrauded private parties. 231 So too, claims by foreign regulatory agencies for 232 environmental damage have been treated as recoverable.

(a) may not be applied by reason of an internationally mandatory rule of the forum; or (b) is a penal, revenue or other public law of the foreign state; or 227

(c) is inconsistent with the fundamental public policy of New Zealand law.

228

229 230 231 226

S

D . ee avid Goddard, "Does the Internet Require New Norms?" (2000) 2 International Law Forum du droit international 183 at 188- 190.

124

232

See also Dicey paras 5-033 to 040, Cheshire & North at 130-132). Cf. the approach of the High Court of Australia in A-G (UK) v Heinemann Publishers Australia Pty Ltd (1988) 165 CLR30. [2006] EWCA Civ 1370, [2007] QB 846. At [50]. Robb Evans v European Bank Ltd [2004] NSWCA 82, 61 NSWLR 75; United States Securities and Exchange Commission v Manterfield [2009] EWCA Civ 27, [201 0] I WLR 172. US v Ivey ( 1995) 45 OR (3d) 129.

125

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • What Law Will the Court Apply?

One of the most contentious contexts in which the rule had been suggested to be applicable was the enforcement of rules to prevent the illegal export of cultural heritage items. Lord Denning had opined that such laws were unenforceable as contrary to the rule against the enforcement of foreign public law in Attorney-General for New Zealand v 233 Ortiz, though the case was ultimately decided against New Zealand by the House of 234 Lords on other grounds. More recently, however, in Government of Iran v Barakat 35 Galleries2 the English Court of Appeal was prepared to treat such a claim as a proprietary patrimonial claim, which did not offend the rule against the enforcement of foreign public law. (b)

Public Policy

The rule against the enforcement of foreign public law describes the outer boundaries of the kinds of claims that a New Zealand court may entertain under Private International Law and therefore, where it applies, operates to deprive the court of jurisdiction. By contrast, the public policy exception only applies at the end of the process, once the court has already determined that foreign law is applicable to the issue and has identified the content of the relevant foreign rule by admissible evidence. In that event, the court will only decline to apply the rule if it finds that it would" 'shock the conscience' of a reasonable New Zealander, or be contrary to New Zealand's view of basic morality or a violation of essential principles of justice or moral interests in New 236 Zealand." This will only be so in wholly exceptional cases. The mere fact that the application of the foreign rule will lead to a different outcome than that prescribed by New Zealand law is not enough. One situation in which the public policy exception may be invoked is where the foreign rule is contrary to a clearly established rule of Public International Law: Kuwait Airways Corp v Iraqi Airways Co (Nos 4 & 5) [2002] 2 AC 883.

(c) Codified choice of law rules; and, (d) Statutes silent as to their territorial application. Each category will be analysed in turn. The last category is by far the most common. (a)

Some statutes set out limits on their territorial application. Sometimes, such a provision is self-limiting, but nevertheless displaces the choice of law that would otherwise apply. Thus, for example, s 137 of the Credit Contracts and Consumer Finance Act 2003 provides that it applies to a contract (or other specified transaction) if it: (a) is governed by the law of New Zealand; or (b) would be governed by the law of New Zealand but for a choice oflaw provision in the contract... Such a provision operates to confine the scope of the Act so that it will not apply where the applicable law is foreign, save where such a choice of foreign law is evasive. In other cases, Parliament has expressly considered the question of territorial application and has expressly provided for an extended reach for the statute. Thus, s 4(1) of the Commerce Act provides that it "extends to engaging in conduct outside New Zealand by any person resident or carrying on business in New Zealand to the extent that such conduct affects a market in New Zealand." In such a case, the territorial scope of the statute will be interpreted strictly. Express language or necessary implication is required to achieve extraterritorial effect for a statute. It is for Parliament and not the courts to decide what extraterritorial effect a statute should have: Poynter v Commerce Commission [2010] NZSC 38, [2010] 3 NZLR 300. (b)

8.5

Applying New Zealand statutes to cases with foreign elements

New Zealand courts are required to give effect to New Zealand legislation. If on its proper construction a New Zealand statutory provision requires application to a crossborder issue before a New Zealand court, the statute must be applied even if the normal choice of law rules in relation to that issue would lead to the application of the law of some other country. The principle is clear: the problem more often lies in determining whether or not, where there is some "international" element in the facts of a case a New Zealand statute applies. There are a range of legislative techniques, which ' require separate consideration: (a) Territorially limited statutes; (b) Internationally mandatory rules (overriding statutes);

233 234

235 236

[1984] I AC I (CA) The relevant New Zealand legislation, now called the Protected Objects Act 1975, was amended in 20 IO in order to seek to increase the enforceability of New Zealand claims for the recovery of such objects through accession to the two leading international treaties in the field. The Act makes specific provision for the enforcement of claims based upon illegal export of cultural heritage objects from reciprocating states: s I OB. [2007] EWCA Civ 1375, [2008] 3 WLR 486. Reeves v One World Challenge llC [2006] 2 NZLR 184, at [67].

126

Territorially limited statutes

Internationally mandatory rules (overriding statutes)

Other statutes may expressly override the normal choice of law rules, and be expressed to apply in circumstances in which New Zealand law would not normally determine the relevant issue. There are few such statutes currently in force in New Zealand. A very clear example is s 7 of the Insurance Intermediaries Act 1994, which provides that ss 4 to 6 of that Act apply to dealings by insurance intermediaries and render certain contractual provisions ineffective "despite the proper law of any contract being the law of a country other than New Zealand". While it is clear that the application of this Act is not defeated by a contract which is inconsistent with its provisions merely because the contract is not governed by New Zealand law, the Act is rather unhelpfully silent on what the relevant connecting factors are for the application of this Act: presumably it does not apply to purely domestic foreign transactions, but the basis for determining its scope is far from clear. By contrast, the Maritime Transport Act 1994 both displaces ordinary choice of law rules and provides for its own spatial application. Section 209 gives the Hague-Visby Rules the force of law in New Zealand. These Rules include Article 3(8), which avoids any clause purporting to avoid liability applicable according to the Rules. Articlel0 further provides: The provisions of this Convention shall apply to every Bill of Lading relating to the carriage of goods between ports in two different States if:

127

Goddard and Mclachlan • What Law Will the Court Apply?

NZLS CLE Seminar• Private International Law

private international law administered in our Courts, are governed by foreign law. [emphasis added].

(a) The Bill of Lading is issued in a Contracting State, or (b) The carriage is from a port in a Contracting State, or (c) The contract contained in or evidenced by the Bill of Lading provides that the rules of this Convention or legislation of any State giving effect to them are to govern the contract whatever may be the nationality of the ship, the carrier, the shipper, the consignee, or any other interested person.

The UK equivalent of these provisions was held by the House of Lords to impose an internationally mandatory rule which overrode a choice of foreign law in the contract in the circumstances set out in Article 10: The Hollandia [1983] AC 565. Parliament had specifically directed its mind to the cross-border situation and had laid down a rule which provided in terms that it was to apply irrespective of the ordinary choice of law process in defined circumstances. (c)

Codified choice of law rules

A third possibility is that Parliament may itself choose to codify the applicable choice of law rules. There are numerous examples of this in New Zealand law in the field of family law. There are rather fewer such examples in the commercial and property law context. Such a codification may be achieved either: (a) Comprehensively: by enacting a set of multilateral conflicts rules applicable to a particular subject-matter, as for example ins 72 of the Bills of Exchange Act 1908; or (b) Partially: by providing unilateral conflicts rules determining the situations in which the New Zealand statute will apply, as for example in s 7 of the Property (Relationships) Act 1976. 237 (d)

The Supreme Court applied this principle in Ludgater to the construction of the application of s 9 of the Law Reform Act 1936, which provides for third party rights against insurers. Section 9 is expressed in general terms to create a charge on all insurance money payable under a contract of insurance entered into by any person for the benefit of a third party claimant in the event that the insured becomes insolvent. The section is silent as to its territorial application. The Supreme Court held that, nevertheless, the section did not apply where the situs of the debt payable under the insurance contract was outside New Zealand. It considered that, to hold otherwise would involve it in making an order in relation to property abroad which may well conflict with an actual or likely determination of the foreign court. 238 It held (at [33]) that "s 9 must be interpreted in accordance with the rules of private international law which have the consequence of disapplying it if the transaction is, according to the relevant choice of law, governed by foreign law." This rule is, as Dixon J accepted in the Wanganui-Rangitikei case, a rule of construction only. It may be displaced where some other restriction is supplied by the context or subject-matter. Sections (a) and (b) give some examples of such statutes. In other cases, the court may find that a different territorial construction must be implied such that, even though the choice of foreign law is valid, nevertheless the mandatory pro~isions of New Zealand law must be applied. Thus, for example, the High Court of Australia has held that legislation designed to protect domestic consumers in hire purchase arrangements applied 239 irrespective of choice of law to contracts entered into in the forum. In Ne_w Zealand, that particular problem has been dealt with expressly bys 137(b) of the Credit Contracts and Consumer Finance Act 2003 discussed above. But the general point that the court may find that, at least to some extent, it is essential to reach a countervailing construction of the statute, remains valid.

Statutes silent as to territorial application

The category of statutes which poses the greatest problems, and is also by far the most numerous, is that of statutes which are on their face of general application. Such statutes typically refer to "all persons", "all contracts" and so forth and do not specify any limitations on their scope of application, whether territorial or otherwise. The proper approach to the construction of such statutes has recently been clarified by the unanimous judgment of the Supreme Court in Ludgater Holdings Ltd v Gerling Australia Insurance Co Pty Ltd [2010] NZSC 49, [2010] 3 NZLR 713. The Court approved (at [24]) the "well settled rule of construction" propounded by Dixon J in WanganuiRangitikei Electric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581 at 601: The rule is that an enactment describing acts, matters or things in general words, so that, if restrained by no consideration lying outside its expressed meaning, its intended application would be universal, is to be read as confined to what, according to the rules of international law administered in our Courts, it is within the province of our law to affect or control. The rule is one of construction only, and it may have little or no place where some other restriction is supplied by context or subject matter. But, in the absence of any countervailing consideration, the principle is, I think, that general words should not be understood as extending to cases which, according to the rules of

8.6

The doctrine of renvoi has little relevance in commercial matters, so is only discussed briefly in this booklet. It is, however, useful to be aware of the concept in general terms, not least in order to understand the clauses that are sometimes included in choice of law provisions in contracts out of an abundance of caution, to ensure there is no room for any doubt on the point. When a New Zealand court determines that an issue before it (eg succession to movables of an intestate New Zealand citizen domiciled in France) is governed by a foreign law (French law, as the law of the domicile), the question then aris~s whether the_ New Zealand court should apply the French domestic law which applies to success10n to movables or whether the New Zealand court should apply all the rules that would be applied t~ the case by a French court considering the case, including ~he French private international law rules. In the example given, a French court would m fact apply New Zealand law as the law of the intestate's nationality. This reference back to New Zealand law is called "renvoi".

238 239 237

On which see Walker v Walker [ 1983] NZLR 560.

128

Renvoi

Applying Societe Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30, [2004] I AC 260. . Kay's Leasing Corp Pty Ltd v Fletcher ( 1964) I I 6 CLR 124. See generally Dicey l I th ed at I I69-1176 and Cheshire & North, 11th ed at 453-454.

129

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Contracts

!n

som~ cases, including succession, the courts will apply the domestic and private mternat10nal law rules of the foreign legal system selected by the relevant choice of law rule. So, in the example given, a New Zealand court will determine entitlement to the intestate's movables by applying New Zealand law. For a discussion of which areas renvoi will apply to, and the related concepts of transmission and double renvoi (see Dicey chapter 4, Cheshire & North chapter 5). For present purposes, the most important rule is that renvoi has no place in the law of contra~t. The p~oper law_ of a contract is determined either by the parties' choice or by an analysis of which law is most closely connected with the contract. That law is then ~pplied. to the contract as if it were a domestic contract, excluding the private mternatlonal law rules of that law (Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, at 61-62, Dicey para 32-043, Cheshire & North at 71). The High Court of Australia has recently adopted a type of renvoi in transnational tort cases: Neilson v Overseas Projects Corp of Victoria Ltd [2005] HCA 54, 223 CLR 331. The pot~ntial significance and application of this approach in New Zealand will depend in the first mstance upon the content of the New Zealand choice of law rule for tort a matter which will be discussed further in Ch 10 below. '

9.

CONTRACT

9.1

The proper law of a contract

(a)

What is the "proper law"?

Where parties from more than one jurisdiction enter into a contract, a wide range of issues may arise to which the law of more than one jurisdiction could be relevant. The law of the place of performance (lex loci solutionis) and the law of the domicile of each party (lex domicilii) each play a role in resolving private international law issues in relation to contracts. But the most important system of law in relation to any contract, which will determine most issues in relation to that contract, is its proper law (lex causae ). The proper law of a contract is ... the system of law by which the parties intended the contract to be governed, or, where their intention is neither expressed nor to be inferred from the circumstances, the system of law with which the transaction has its closest and most real connection. (Dicey paras 32-005 to 007; Dicey (11th ed) rule 180)

Choice of law rules in relation to a range of contract law issues are discussed in section 9.2 below. The proper law of a contract governs almost all issues relating to the formation, validity, interpretation and discharge of the contract. The central role of the proper law of a contract makes the importance of determining what that proper law is abundantly clear: this question is discussed in section 9 .1 (b). Before turning to the substance of this topic, a note of caution must be sounded for New Zealand lawyers referring to recent English cases and texts on choice of law in contract. Almost every case before an English court on this topic now falls to be addressed by reference to the Rome I Regulation (and its predecessor the Rome Convention 1980). These are European law instruments, which provide common multilateral choice of law rules for contract, applicable in all EU member states, replacing their prior choice of law rules. Thus, in the case of England, these rules replace those of the common law. The current edition of Dicey does not discuss the common law in relation to choice of law in any detail: readers from other common law jurisdictions are referred to chapter 32 of the 11th edition of the text. The current edition of Cheshire & North also largely omits discussion of the common law. The 11th edition of Dicey, and Nygh and other recent Australian texts, should be the starting point for research in relation to New Zealand law in this field. (b)

Identifying the proper law of a contract

Express choice of proper law

If the parties have expressly selected a system of law to govern their contract, that choice will be given effect by a New Zealand court provided that it is bona fide and legal, and there is no public policy reason for avoiding the choice (Vita Food Products Inc v Unus Shipping Co Ltd [1939] AC 277 (PC) at 290; Dicey 11th ed at 1170).

130

131

Goddard and Mclachlan • Contracts NZLS CLE Seminar • Private International Law

A choice of law clause in a contract will almost always be treated as effective in New Zealand. The clause will not be invalid merely because the proper law of the contract would have been different if the clause had not been included. Nor will it be invalid merely because there is no factual connection between the contract and the country whose law is selected: many contracts are governed by English law even though none of the parties is based in England and the contract itself has no connection with England. There are three principal limits on the effectiveness of a choice of law clause under New ' Zealand law: (a) A choice of law clause is unlikely to be treated as effective if it is included in the contract in bad faith, or for reasons contrary to public policy - for example, to avoid the application of a mandatory New Zealand statutory provision, or in an attempt to render valid an otherwise purely domestic transaction that is invalid under New Zealand common law (such as a wagering contract). (b) A New Zealand statute may provide for such choices to be ineffective. (c) A New Zealand court will apply internationally mandatory rules of New Zealand law in respect of a transaction whether or not a contract is governed by New Zealand law. The limits on grounds of mandatory rules and public policy have been discussed in section 8 above. 240 The proper law must be identified at the time of contracting: despite some authority to the contrary the better view is that the proper law cannot depend on subsequent events or vary depending on the circumstances in which an issue arises (Nygh at 391, citing Dubai Electricity Co v Islamic Republic of Iran Shipping Lines (The Iran Vojdan) [1984] 2 Lloyd's Rep 380). The same objections do not however apply to a subsequent contractual variation of a contract governed by the law of one country, to substitute as the contract's proper law the law of another country. The parties to a contract may select different systems of law to govern different aspects or parts of their contract (depec;age ). But a clear indication that this was their intention will be required, as the natural presumption is that the parties to a contract "intended to refer the entirety of their obligations to one legal system only" (Nygh at 388). 241 The parties to a contract may incorporate some provisions of a foreign law as terms of the contract. Incorporation by reference is not the same as selection of a proper law: it is simply shorthand to avoid writing the terms out in full. For example, the parties to a contract governed by Argentinean law might provide that one party should pay a sum to the other "upon demand, within the meaning of the Property Law Act 2007 (NZ)". This would not mean that the payment obligation was governed by New Zealand law: it would still be governed by Argentinean law, but the contract would be read as if the relevant paragraph from the Second Schedule to the Property Law Act 2007 were set out in it in 242 full._ Where provisions of foreign law are incorporated into a contract by reference, they are mcorporated as they stand at the time of contract: the terms of the contract will not be 24

° For fu rther d.1scuss1on · · the New Zealand contractual context see: Goddard "New Zealand's Contract Statutes: m

241

242

International Transactions" in New Zealand Law Commission Report No 25: Contract Statutes Review ( 1993) Ch 7, but _note that a number of the statutes there discussed have been the subject of subsequent statutory amendment to clarify their application for Private International Law purposes, as mentioned further below. Club Mediterranee v Wendell [ 1989] I NZLR 216, (CA), at 218-9 per Cooke P; see further Campbell McLachlan "Splitting the proper law in private international law" ( 1990) 61 British Yearbook of lnlernalional Law 311. For another example, see Tasman Steamship Company Ltd v Wins/one Ltd [ 1955] NZLR 588 (CA).

132

altered by subsequent changes to the law. This should be contrasted with selection of the proper law of a contract: the law selected is applied as it stands at the time of application, including all changes since the time of entry into the contract. See generally Dicey 11th ed at 1178-1180. New Zealand advisers need to be conscious that the degree of party autonomy that is accepted by the New Zealand courts, and by the courts of other common law countries with law based on English choice of law rules, is not accepted in all other countries. Many civilian countries are less willing to give effect to choice of law provisions in certain classes of contract, such as consumer contracts or employment contracts. Laws in the United States also place greater limits on the freedom of certain parties to select foreign laws to govern their dealings, especially where the choice of law clause is found in a standard form contract entered into between parties with unequal bargaining power. In contracts between substantial commercial parties, these limits on party autonomy are most unlikely to be an issue. But advisers to New Zealand businesses providing online services, for example, should be aware that a provision in an online contract providing for New Zealand law to apply: •

may be treated by foreign courts as subject to mandatory provisions of domestic law, such as consumer protection laws and laws limiting the effect of exclusion clauses;

•

may be treated as ineffective in relation to certain classes of party.

If the effectiveness of such provisions in particular countries where a significant number of purchasers are located is of real commercial significance, it may be wise to obtain local legal advice on the likely effect of such clauses. The interplay between jurisdiction clauses and substantive issues noted in section 13. l(a) below is very relevant here.

No express choice of proper law

Where the parties to a contract have not expressly chosen the proper law, a court may be prepared to infer a choice of law from the circumstances surrounding the contract. The English courts have inferred an intention that a contract should be governed by English law, for example, from an agreement that disputes should be arbitrated in London, from reference to English statutes, and even from matters such as the language and form in which the contract is drafted (see Dicey 11th ed at 1182-1190). The leading case is Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] 1 AC 20 (HL), in which a contract between a Liberian shipping corporation carrying on business in the Gulf and a Kuwaiti insurance company was held to be impliedly governed by English law, because it was written on the standard London marine insurance policy and at the relevant time there was no Kuwaiti law of marine insurance. For New Zealand cases on determining the proper law of a contract in the absence of an express choice of law see: Club Mediterranee v Wendell [1989] 1 NZLR 216 (CA) at 218-219; McConnell Dowell Constructors Ltd v Lloyd's Syndicate 396 [1988] 2 NZLR 257 (CA) at 272-273; Royds v FAI (NZ) General Insurance Co Ltd [1999] 1 ERNZ 820. In the absence of express or implied choice, the contract will be governed by the system of law "with which the transaction has its closest and most real connection": Bonython v Commonwealth ofAustralia [1951] AC 201 at 219 per Lord Simonds.

133

/

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Contracts

9.2 Choice of law in contract: selected topics (a)

Capacity to contract

The question of the capacity of an individual or corporation to enter into a contract raises some exceptionally difficult issues. The capacity of individuals is less relevant to commercial transactions, and is not discussed in detail in this booklet. Dicey suggests a sensible approach to this issue, under which an individual is treated as having the capacity to enter into a particular contract if that individual would have capacity to do so under either the law of his or her domicile, or the lex causae of the contract. 243 There is, however, New Zealand Court of Appeal authority (Baird v Fergusson (1911) 31 NZLR 33) which suggests that, at least in the context of pre-nuptial contracts, incapacity under the lex domicilii of one of the parties must be respected. This decision makes sound sense in the matrimonial property context, but its reasoning does not apply to the same extent in a commercial context. The capacity of corporations to enter into contracts is of considerable practical importance to commercial lawyers. In contrast to the position in relation to individuals, the common law choice of law rule as to the capacity of a corporation (Dicey 14th ed rule 162) is a rule of double incapacity: The capacity of a corporation to enter into any legal transaction is governed both by the constitution of the corporation and by the law of the country which governs the transaction in question.

Many corporations, both in New Zealand and overseas, do not have unrestricted contractual capacity. In particular, in many common law countries where the company law is still based on the 1948 English legislation, a company does not have the capacity to enter into a contract that is outside the objects set out in its memorandum of association. The common law treats the powers of a corporation as limited to the powers conferred on it by the legal system under which it is incorporated and from which it derives its legal personality. Thus a foreign company with no power to borrow under its law of incorporation cannot enter into a valid contract for an advance in New Zealand, although New Zealand law contains no prohibition on borrowing by foreign corporations. A corporation's capacity to enter into a contract may also be limited by the law of the country which governs the relevant transaction. A New Zealand company, with power to acquire land, would lack capacity to enter into a contract to purchase land in a foreign country the law of which prohibits foreign corporations from acquiring land.

suggested, the better view). Provisions in other jurisdictions that resemble s 18A of the former New Zealand Companies Act 1955 might well not assist in corresponding circumstances, however, as they do not actually confer capacity on the company, but simply purport to validate certain contracts - this might not be effective in respect of New Zealand law contracts, before a New Zealand court. The complexity of these issues, the relevance of more than one system of law, and the uncertainty resulting from some statutory interventions in relation to the ultra vires doctrine, require lawyers to take a cautious approach in relation to the capacity of foreign corporations. It is prudent to ensure that the corporation has contractual capacity under the law of its incorporation and under any law selected as the proper law of the contract. Particular caution is desirable in relying on any partial reforms of the ultra vires doctrine, the application of which may be uncertain in some courts. Appropriate opinions as to capacity should normally be obtained from solicitors in the relevant foreign jurisdictions. It is easy for New Zealand lawyers to overlook capacity issues, now that they arise so seldom in domestic transactions: but in the cross-border context these issues remain very significant, and failure to have regard to them could have very serious consequences both for the client and the adviser. (b)

When considering the effect of a contract, the first question is whether a contract has been formed at all. It is generally accepted that issues relating to requirements such as offer and acceptance and consideration are governed by the putative proper law of the contract: that is, by the law that would have been the proper law of the contract if a contract had been entered into. 244 A number of problems can however arise if this test is applied without qualification (see Dicey 11th ed r 181). Similarly, the question of whether a mistake made by a party prevented a contract from being formed will be determined by reference to the putative proper law of the contract (Mackender v Feldia AG [1967] 2 QB 590). The effect of the category of mistake sometimes referred to as "equitable mistake", where the mistake does not prevent the formation of a contract but may make it unconscionable for one party to rely on the contract, will be determined by the proper law of the contract. In New Zealand the Contractual Mistakes Act 1977 applies to both categories of mistake. That Act applies only where the (putative) proper law of the contract in question is New Zealand law: s llA.24s

The effect on a contract of undue influence, unconscionability and duress will also be determined by reference to the (putative) proper law of the contract. In some circumstances, however, it is possible to envisage a New Zealand court declining to give effect to a contract procured improperly, for reasons of public policy, although it may be valid under its proper law (compare Israel Discount Bank of New York v Hadjipateras [1984] 1 WLR 137).

The reforms of the doctrine of ultra vires in New Zealand, Australia, England and other countries have tended to complicate rather than simplify the private international law issues that arise in relation to corporate capacity. If a question arises in New Zealand about the capacity of an English company, ss 17 and 18 of the New Zealand Companies Act 1993 will not apply, as they only apply to companies registered under that Act (or reregistered under it). Section 35 of the Companies Act 1985 (UK), which deems certain transactions to be within a company's capacity, may be applied by a New Zealand court, provided it is seen as a substantive rule going to the company's capacity (as is, it is

244

243

245

11th ed rule 182: this issue is also addressed in r 209 of the current 14th ed of Dicey, as the Rome Convention does not govern all questions of capacity - but cl (2) of the current r 179 is based on the Rome Convention, and probably does not reflect the common law position.

134

Formation of a contract

The extent to which the putative proper law is determined by a choice of law clause in the disputed contract is itself an extremely difficult issue (see Dicey I Ith ed at 1200- 120 I and Cheshire & North 11th ed at 474-476). For a discussion of the problems that may arise for a foreign court considering whether a contract governed by New Zealand law is affected by a mistake see Goddard "New Zealand' s Contract Statutes: International Transactions" in Law Commission Report No 25, Contract Statutes Review ( 1993). These have been ameliorated to some extent by the 2002 amendments to the definition of the term "Court".

135

NZLS CLE Seminar • Private International Law

(c)

Goddard and Mclachlan • Contracts

Formal validity

(g)

A contract will be formally valid if it satisfies the execution requirements of either the law of the place where the contract is formed, or the putative proper law (Dicey 11th ed, r 183). It is important to bear in mind that New Zealand law distinguishes between formal validity and enforceability: a contract may be formally valid but still unenforceable for want of written evidence of the contract (see section 8.2(a) above). (d)

Essential validity

Even where a contract is formally valid, and is not illegal (see section 9.2(i) below) it may be void according to some systems of law. For example, wagering contracts are void under New Zealand law. The essential validity of a contract is determined by its putative proper law: a New Zealand court will enforce a wagering contract governed by the law of Monaco. See Dicey 11th ed, r 184.

It is generally accepted that the question of what is required to be done in order to perform the obligations under a contract, and so discharge the duties arising under that contract, is governed by the proper law of the contract (Dicey 11th ed, r 186). In particular, the proper law of the contract determines whether or not it is permissible to deduct tax (such as GST) from a payment under the contract (Keiner v Keiner [1952] 1 All ER 643). The mode of performance, on the other hand, is governed by the law of the place of performance. That is, for example, whether payment must be tendered in cash or by cheque, in the absence of an express stipulation as to such matters. The distinction between the substance of an obligation, and the 'mode' of performing it, is not always a simple one to draw. (h)

(e)

Who can rely on a contract?

The question of who can sue on a contract, and in particular whether a person who is a party but has not provided consideration, or who is not a party but who stands to benefit from the contract, can enforce the contract, depends on the proper law of the contract. The proper law of the contract determines what rights arise out of it, and who enjoys those rights. It follows that the Contracts (Privity) Act 1982 applies only to contracts the proper law of which is New Zealand law, as s 13A now confirms. The decision in Coulls v Bagot's Executor and Trustee Co [1967] ALR 385, that a person who is a party to a contract but has not provided any consideration may nonetheless enforce the contract, would therefore apply where a contract was governed by Australian law, but probably not to a contract that is governed by English law. The reforms to the doctrine of privity in the UK, implemented by the Contracts (Rights of Third Parties) Act 1999, can be relied on in a New Zealand court in connection with English law contracts entered into after 11 May 2000 (or which were entered into in the preceding six months, and expressly provided for the Act to apply). (f)

Interpretation of the contract

The interpretation of a contract is governed by its proper law. It is from the proper law that the appropriate canons of construction, presumptions and so forth must be drawn. Where a contract incorporates provisions from another system of law (as, for example, where it expressly incorporates the terms that would be implied by the New Zealand Sale of Goods Act) it appears that the words alone are drawn from the system of law the terms of which are incorporated, while their interpretation is still governed by the proper law of the contract (see section 9.l(b)(i) above). A more complex position may arise where a contract is founded on another agreement with a different proper law, and depends on the effect of that agreement for its own effect. Reference to both systems of law may be required (see Vesta v Butcher [1988] 2 All ER 43 (CA), [1989] 1 All ER 402 (HL) esp per Lord Lowry at 419-420, Dicey 11th ed r 185)_246 ' D"1

scusse

d .

m McLachlan "Splitting the proper law in private international law" ( I 990) 61 British Yearbook of

136

Discharge of contracts

The question of whether an obligation under a contract is discharged by frustration of the contract, or by supervening illegality, is a matter for the proper law of the contract (Dicey 11th ed, r 187). The Frustrated Contracts Act 1944 thus applies only to contracts the 247 proper law of which is New Zealand law, ass 3(1) of that Act confirms. (i)

Illegality

The question of whether an obligation under a contract is discharged by supervening illegality is determined by the proper law of a contract. The Illegal Contracts Act 1970 was amended in 2002 to make it clear that the Act applies only to contracts governed by New Zealand law: see s 3, defining the term "illegal contract" by reference to contracts governed by New Zealand 1aw. 248 Illegality under the proper law, or the law of the place of performance, or the lex fori may have implications for the enforceability of a contract: (a) The court will not enforce an agreement, whatever its proper law, if it is contrary to an internationally mandatory statute of the forum or if it is contrary to New Zealand public policy: Mackender v Feldia AG [1966] 3 All ER 847; Apple Computer Inc v Apple Corps SA [1990] 2 NZLR 598. (b) The court will not enforce an agreement, even though it is not contrary to New Zealand law, if it is illegal under the proper law of the agreement: Libyan Arab Foreign Bank v Bankers Trust Co [1989] 1 QB 728. ( c) The court will not enforce performance or give damages for non-performance of an act required to be done under a contract, whatever be the proper law of the contract, if the act would be illegal under the law of the country in which it is necessarily required to be performed (lex loci solutionis): Ralli Brothers v Compania Naviera Sota y Aznar [1920] 2 KB 287. For this exception to apply, it is immaterial whether one party has to

247

248 246

Obligations under a contract, and their performance

International Law 31 I. See Goddard "New Zealand ' s Contract Statutes: International Transactions" in Law Commission Report No 25: Contract Statutes Review ( 1993) .. For a discussion of the effect of the Illegal Contracts Act 1970 in cases with an international element see Goddard ''New Zealand ' s Contract Statutes: International Transactions" in Law Commission Report No 25: Contract Statutes Review ( 1993). Some, but not all, of these concerns have been addressed by the 2002 amendments to the Act.

137

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Contracts

equip himself to make payment by an act in another country, including his home country. For this reason, a defence to non-performance of a payment obligation based upon exchange control restrictions imposed in the home country of one of the parties to a contract will normally fail unless there is a contractual obligation to make · that coun try .249 payment m

moratorium did not apply. But it is more likely that the court would conclude that the statutory management provisions are intended as "overriding statutes" (see section 8.5 above), to be applied to all cases before a New Zealand court.

9.3 (j)

Breach of contract (a)

The question of whether there has been a breach of a contract, and the mutual rights of the parties as a consequence of that breach, are governed by the proper law of the contract. The question of remedies is partly substantive and partly procedural (see section 8.2(b) and (f) above). Substantive issues will be determined by the proper law, and procedural issues by the law of the forum. The Contractual Remedies Act 1979 as initially enacted was silent on the relevant connecting factor(s) for the application of the rules it sets out in relation to matters such as cancellation, misrepresentation and exclusion clauses, giving rise to some difficult private international law issues. 250 But s 14A now expressly provides that the Act does not apply to any contract or part of a contract that is not governed by New Zealand law. (k)

Moratoria

As at 27 June 2012, 78 countries were parties to the Convention, including Australia, New Zealand, the United States, Canada, the Russian Federation, China, Singapore, France, Germany and the Netherlands (but not the United Kingdom). 252 The New Zealand Act provides that the Convention has the force of law in New Zealand (s 4), and (s 5) that its rules

It has been generally accepted by courts in the United Kingdom and Australia that a moratorium applies to relieve a party to a contract from the duty to perform that contract only if the moratorium arises under the system of law which is the proper law of the contract (Dicey 11th ed at 1245-6, and see In re a mortgage, J to A [1933] NZLR 1512). Thus an Australian or English court would treat the power of a statutory manager to suspend or waive performance of pre-statutory management contractual obligations as limited to obligations under contracts governed by New Zealand law. The place of payment is irrelevant, so that a debt owed by a company under statutory management governed by English law would be recoverable by that company before a foreign court, even if it is payable in New Zealand. Judgment could be obtained in the UK or Australia, but it would not be able to be enforced against the company in statutory management in New Zealand. It would be able to be enforced against assets outside New Zealand. The position in New Zealand in relation to contracts entered into before statutory management which are governed by foreign law is not clear. A New Zealand court might apply the general principles of private international law described above, and hold that the

... have effect in place of any other law of New Zealand relating to contracts of sale of goods to the extent: (a) that the law is concerned with any matter that is governed by the Convention; and (b) that the application of the law is not expressly permitted by the Convention.

Since New Zealand's accession to the Convention, the Convention will apply to international sales of goods with a New Zealand buyer or seller if: (a) the other party has its place of business in another Convention state: art l(l)(a); or (b) the proper law of the contract is New Zealand law: art l(l)(b) (and the Convention is not otherwise excluded under art 6 - see section (c) below); or (c) the proper law of the contract is the law of another Convention state which has not entered a reservation to Article 1(l)(b ). 253 The first category is very important, and increasingly so as the number of states party to the Convention continues to grow. Many sale of goods contracts contain no express choice of law clause. In such a case, to the extent that the counter-party to a sale of goods contract with a New Zealand party has its place of business in another Convention state, the Convention will ipso facto apply to the transaction. 254 251

252

250

Part of New Zealand law

In 1980 the United Nations Conference on Contracts for the International Sale of Goods adopted a convention setting out uniform rules to govern the sale of goods between parties in different countries (the Vienna Convention). The Vienna Convention came into force on 1 January 1988. In 1992, the New Zealand Law Reform Commission recommended that New Zealand become a party to the Convention. 251 The Convention entered into force for New Zealand on 1 October 1995. It is given effect under New Zealand law by the Sale of Goods (United Nations Convention) Act 1994.

The law in some countries provides for the imposition of a moratorium in respect of debts and other obligations, in certain circumstances. The only form of moratorium commonly encountered under New Zealand law today is the moratorium associated with statutory management of a company under the Companies Special Investigation and Management Act 1989, or the Reserve Bank of New Zealand Act 1989.

249

Vienna Convention on a Uniform Law for the Sale of Goods

Kl . emwort, Sons & Co ltd v Ungarische Baumwo/le lndustrie AG [1939] 2 K.B . 678 (CA); Rossano v Manufacturers' life Insurance Co [1963) 2 Q.B. 352, 371; Toprak Mahsulleri Ofisi v Finagrain Compagnie Commerciale Agricole et Financiere S.A. [1979) 2 Lloyd's Rep. 98 (CA); Libyan Arab Foreign Bank, ibid; Argo Fund ltd v Essar Steel ltd [2005] EWHC 600 (Comm.), [2005) 2 Lloyd's Rep. 203; Imperial life Assurance Co v Colmenares ( 1967) 62 D.L.R. (2d) 138 (Sup Ct Can); Jones v Chatfield [ 1993) I N.Z.L.R. 617. See Goddard "New Zealand's Contract Statutes: International Transactions" in Law Commission Report No 25: Contract Statutes Review ( 1993).

138

253

254

New Zealand Law Commission Report No 32 The United Nations Convention on Contracts for the International Sale of Goods: New Zealand's Proposed Acceptance (I June 1992) For current information in relation to the parties to the Convention, and declarations and reservations made by those parties see http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/ l 980CISG_status.html. Section 6 of the Sale of Goods (United Nations Convention) Act 1994 provides for certificates to be given by the Secretary of Foreign Affairs and Trade in relation to whether particular states are parties to the convention, and declarations made by such States, which are conclusive for the purpose of New Zealand proceedings. On the scope of the Convention, with reference to New Zealand, see Schlechtriem "Requirements of application and sphere of applicability of the CISG" (2005) 36 VUWLR 781. For a recent example see Smallmon v Transport Sales ltd [2011] NZCA 340, [2012) 2 NZLR 109.

139

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Contracts

The third category mentioned above requires some further explanation. The Convention provides that its rules apply not only to sales of goods where the buyer and seller are in different convention states (art l(l)(a)), but also to contracts for the sale of goods where the buyer and seller have their places of business in different states (whether or not parties to the Convention) and the law governing that contract is the law of a Convention country under the normal rules of private international law (art l(l)(b)). However, parties to the Convention are able to enter a reservation to art l(l)(b). The most significant New Zealand trading partners that have entered such a reservation are the United States, China and Singapore. Neither New Zealand nor Australia has entered a reservation in respect of art l(l)(b). The Convention's rules therefore apply to international contracts for sale of goods the proper law of which is New Zealand law (for contracts entered into on or after 1 October 1995) or the law of an Australian state or territory (for contracts entered into on or after 1 April 1989). But the Convention's rules will not apply to a contract governed by the law of a state of the United States of America, save to the extent that the other party has its place of business there (and has not contracted out of the Convention under Article 6, see below section 9.3(c)). (b)

Scope

The Convention (which is set out in the schedule to the Act) provides internationally uniform rules for sales of goods contracts dealing with: formation; performance and breach; obligations of the buyer and the seller; passing of risk; and the consequences of breach. 255 Article 2 provides that the Convention does not apply to sales: (a) of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use; (b) by auction;

(c)

Exclusion

Article 6 provides that the parties to an international sale of goods contract can exclude the application of the convention, or (subject to certain limits which apply where states have entered reservations requiring contracts for sale of goods to be in writing) derogate from or vary any of its provisions. It is therefore open to parties to a contract to which the Convention would otherwise apply to agree that a different law in relation to sale of goods will apply to their dealings. This could be achieved by either choosing the law of a third state not party to the Convention (such as English law) to govern the contract; or by choosing the domestic law of a Contracting State in place of the Convention. Thus, if New Zealand law other than the Vienna Convention were chosen, it would have the effect that the Sale of Goods Act 1908 would apply to the transaction. So, too, if New York law were chosen, but the Vienna Convention excluded, it would have the effect that the Uniform Commercial Code would apply.

In the early days of the Convention, and following New Zealand's accession, it was common practice in standard-form commercial contracts to exclude the Vienna Convention and to apply a domestic legal system. There were strong arguments advanced in favour of the certainty achieved by many decades of experience with the Sale of Goods Act 1908, reflected in the many precedent cases discussed in Benjamin's Sale of Goods, 256 as contrasted with the then uncertainty in the operation of the uniform rules. But it is submitted that the force of these objections has diminished over time as the Convention has passed into everyday use in the law of many of New Zealand's major trading partners. In addition to readily accessible commentaries in English, there are also a number of excellent databases collecting court decisions on the interpretation of the Convention. 257 The Convention provides the sound practical advantage in transnational 258 commercial dealings that it provides a set of uniform rules common to both parties.

(c) on execution or otherwise by authority oflaw; (d) of stocks, shares, investment securities, negotiable instruments or money;

9.4

Contracts made online

(e) of ships, vessels, hovercraft or aircraft; (f) of electricity.

Moreover Article 4 provides that: This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not concerned with: (a) the validity of the contract or of any of its provisions or of any usage; (b) the effect which the contract may have on the property in the goods sold.

Thus, even where the Convention is to apply, it is still prudent to make express provision for a choice of law to govern the contract as a whole as to matters not otherwise dealt with in the Convention.

Before leaving the topic of choice of law in contract, it is important to note some special issues that arise where a contract is made online, between parties who may be in different countries. These issues stem from the "dematerialised" nature of the contract, and the difficulty for a party of ascertaining with certainty the physical location of the other party, or other potentially relevant characteristics that have a bearing on that party's legal capacity and status, and the application of particular protective laws (eg domestic consumer protection laws). These issues arise in a wide range of contexts online, including where businesses deal with each other (for example using an online procurement system), where services are sold online (eg where software and other content are delivered via the Internet) or where goods or services are sold to end users online, with delivery to take place offline, eg sales of books, or hotel reservations and travel packages, or electrical goods.

256

mF

. . . or commentaries on the substantive rules see Peter Schlechtnem and Petra Butler UN Law on International Sales (Springer, Berlin, 2009) and Ingeborg Schwenzer (ed) Schlechtriem and Schwenzer: Commentary on the UN Convention on the International Sale of Goods (3 rd edn, Oxford UP, 2010).

140

257 258

Bridge (ed) Benjamin's Sale of Goods (8th ed, Sweet & Maxwell, London, 20 I 0). Notably CLOUT at www.uncitral.org; and the Pace Law School database at http://law.pace.edu/cisg. On the importance of an autonomous international interpretation of the Convention see: Smallmon v Transport Sales ltd [2011] NZCA 340, [2012] 2 NZLR 109.

141

NZLS CLE Seminar• Private International Law

(a)

Goddard and Mclachlan • Torts

The importance of choice of law clauses

It is impossible to overemphasise the desirability, in the online context, of specifying the proper law of any contract entered into. The difficulty of identifying the proper law of an online contract in the absence of an express choice of law is even greater than the difficulty of doing so in the offline context. Few if any of the relevant indicators that are used in the offline context will be available online, especially where both contract formation and performance occur online. There is no meaningful place of performance, and neither provider nor purchaser will, in most cases, have any interest in - perhaps not even any knowledge of- the other's location. The specification of the proper law needs to be effectively incorporated into the online contract (see section 13.5 below). (b)

Limits on the effect of choice of law clauses

Where a choice of law clause has been effectively incorporated into a contract, that is not the end of the matter. In some countries, as noted above, a choice of law clause may not be accorded the same effect as it is in New Zealand. Certain classes of contracting partyespecially consumers - may not be treated as capable of making a valid choice of law. And even where the clause is generally effective, the chosen law will be applied by the courts in a particular country subject to the mandatory laws of that country (see section 9.1 above). For these reasons, a choice of law clause significantly reduces uncertainty and risk, but does not eliminate it completely. For other issues that arise in relation to online contracts, see section 15.5 below.

10. TORTS

10.1

Acts and omissions outside New Zealand

A New Zealand court has jurisdiction to hear an action in respect of a wrong committed outside New Zealand, provided that the defendant can be properly served with New Zealand proceedings by any of the methods considered in section 4.2 above (Richards v McLean [1973] 1 NZLR 521). Where an action is brought in New Zealand in respect of a wrong committed outside New Zealand, the New Zealand court must determine whether to apply New Zealand law, or the law of some other jurisdiction. The only connection New Zealand may have with the claim is that the defendant is currently based in New Zealand, and New Zealand is the only forum in which the court will have personal jurisdiction sufficient to ensure international enforceability of any judgment obtained even if the defendant does not appear. Where New Zealand's connection with the claim is slight, the basic objectives of private international law suggest that it would be inappropriate to apply New Zealand law, and potentially reach a conclusion different from that which would be reached if the claim were brought in the "natural" forum. Until relatively recently, however, it seemed that the common law did take this unsatisfactory approach. The common law in this field has had a somewhat chequered history: it has been very uncertain, and much criticised. In recent years, the position has become much clearer - though still far from immune from criticism. The modem starting point for a New Zealand court required to consider a tort claim in respect of acts done outside New Zealand is now likely to be Red Sea Insurance Co Ltd v Bouygues SA [ 1995] 1 AC 190, a decision of the Privy Council on a Hong Kong appeal. This decision has been treated as stating the law in New Zealand in Baxter v RMC Group pie [2003] 1 NZLR 304 at [58]. The effect of the Privy Council decision in Red Sea Insurance is well summarised in r 235(2) and (3) of Dicey. This Rule is expressed to apply only to defamation cases, as in respect of all other tort claims the English law has been significantly altered by the Private International Law (Miscellaneous Provisions) Act 1995 (see generally Dicey r 231 and commentary). In New Zealand, however, these principles apply in respect of all tort claims. The relevant parts of r 235 provide as follows (adapted to refer to New Zealand rather than England, and to all torts rather than just defamation): (2) As a general rule, an act done in a foreign country ... is actionable [as a tort] in [New Zealand] only if it is both (a) actionable according to [New Zealand] law (or in other words is an act which, if done in [New Zealand], would give rise to such a claim) and (b) actionable according to the law of the foreign country where it was done. (3) By way of exception to clause (2) of this Rule, a particular issue between the parties which arises in a [tort] claim may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and the parties.

Clause (2) of the Rule states the original common law principle of "double actionability" derived from Phillips v Eyre (1870) LR 6 QB 1, as reformulated in Boys v Chaplin [1971] 142

143

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Torts

AC 356 (HL). A claim in tort will succeed in New Zealand under this rule if and only if there would be a claim in tort if the act had been done in New Zealand, and the law of the country where the act was done provides for civil liability in respect of such acts. It is now clear that the act must give rise to civil liability in the foreign country, and that earlier authorities suggesting it was enough for the act to be "not justifiable", for example, because it contravened the criminal law of that country, are not good law (see Boys v Chaplin [1971] AC 356 (HL), followed in Richards v McLean [1973] 1 NZLR 521; Dicey para 35-133). Where the double actionability rule applies, the position appears to be that the court applies New Zealand law to determine the case, subject to being satisfied that the act was actionable in the foreign country (see Dicey para 35-134). However, the requirement of double actionability produces peculiar and unjust results in some cases, in particular where a defendant is able to invoke a defence available under one system of law, but not the other, in circumstances where the connection between the claim and the former system of law is tenuous, or the policy rationale for the defence under the domestic law of that country does not apply to cases with an international element of the kind before the court. The choice of law rules for tort have now been reformed in England, Canada and Australia. In England, this was achieved by legislative intervention, at first at the national level, by virtue of Part III of the Private International Law (Miscellaneous Provisions) Act 1995, and more recently at the European law level pursuant to the Rome II Regulation. 259 In Australia, the double actionability rule was abandoned as a result of judicial

reconsideration. In the decisions of John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 and Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491, the High Court of Australia abandoned the rule, and adopted a strict "place of the wrong" (lex loci delicti) rule with no exceptions.260 One consequence of the adoption of this rule in Australia has been that the Court has also had to consider the position that it should adopt when the lex loci delicti itself permits or requires reference to a different law in some situations. In Neilson v Overseas Projects Corp of Victoria Ltd [2005] HCA 54, 223 CLR 331, the plaintiff and the defendant were both Australian nationals and domiciliaries. However, the tort was committed in China. Under Chinese law, the claim would have been barred for limitation. Chinese Private International Law however permitted an exception to its general lex loci delicti rule in cases where both parties had the same nationality or domicile. The High Court of Australia held that the application of its strict lex loci delicti rule in the circumstances of that case nevertheless required it to take account of and apply the Chinese choice of law rule, with the effect that Australian law would apply to the claim, which could therefore proceed. The insertion of this form of renvoi into choice of law of tort could have been avoided had the choice of law rule had some element of flexibility. This is found in the current European rules (art 4(3) of the Rome II Regulation). It was also the solution preferred by the Supreme Court of Canada in relation to international torts, when it adopted a lex loci delicti rule in Tolofson v Jensen [1994] 3 SCR 1022, (1994) 120 DLR (4 th ) 299.

259 26

Regulation (EC) No 864/2007 of 11 July 2007 on the law applicable to non-contractual obligations (Rome II).

° For fu rther d.1scuss1on . see Nygh at 423-425

144

Pending statutory reform or the opportunity for more thorough-going consideration by the Supreme Court, however, the law in New Zealand appears to have followed the decisions of the House of Lords in Boys v Chaplin and the Privy Council in Red Sea Insurance Co Ltd v Bouygues SA [1994] 3 All ER 749, which involves retaining the general double actionability test, but creating an exception from that test in special cases. In Boys v Chaplin it was held that in certain circumstances, where the connection between the tort claim and the place where the act was done was very limited compared with the connection with the forum, the foreign law could be disregarded and the law of the forum alone applied. The rationale for this exception, and the circumstances in which it would apply, were, however, far from clear as the approaches of their Lordships differed in significant respects: identifying a single ratio decidendi was not a simple task. The Privy Council in Red Sea Insurance, resolved one uncertainty created by Boys v Chaplin, namely whether the exception could also result in the law of the forum being disregarded, with the result that the court would look solely to the law of the country in which the tortious acts were committed. The Privy Council held that the exception could operate in this way, and should do so in that case. A New Zealand court has applied the exception in this way and looked solely to the law of the place where the relevant acts occurred: Baxter v RMC Group pie [2003] 1 NZLR 304. The Privy Council also provided more guidance on the circumstances in which the exception will be applied. The general rule must still be applied "unless clear and satisfying grounds are shown why it should be departed from and what solution derived from what other rule, should be preferred" (at 762, citing Lord Wilberforce in Boys v Chaplin). But in a clear case, it is appropriate for an issue to be governed by "the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and with the parties" (at 762). The approach of Lord Wilberforce in Boys v Chaplin in relation to the extent and application of the exception was expressly endorsed (at 762 - for the relevant passage from Lord Wilberforce's speech, seep 757). The Privy Council also confirmed that in appropriate cases, the law applicable to an entire claim, 261 and not just to specific issues, may be determined by reference to this exception. Red Sea Insurance introduces sufficient flexibility into the law to enable justice to be done in most cases. But it leaves a range of questions unanswered. The general rule requiring actionability under the law of the forum remains out of step with most other countries, and lacking in principled justification. Reform remains desirable in New Zealand.

10.2 Does New Zealand law always apply in relation to acts done in New Zealand? The position at common law appears to be that a New Zealand court hearing a claim relating to a tort committed in New Zealand should apply New Zealand law, even where both plaintiff and defendant are from another country, and all other factors point to a connection with that country rather than New Zealand (Dicey paras 35-130, 144 and note also para 35-020). However, this will not always be appropriate: consider, for example, an action between two non-New Zealand parties for misrepresentation inducing entry into 26 1

For a more detailed discussion of the Red Sea decision, see Dicey paras 35-136 to 35- I 40.

145

Goddard and Mclachlan • Torts

NZLS CLE Seminar• Private International Law

a contract governed by foreign law. Legislative reform on this point is desirable, along the lines of the 1995 UK Act. Pending such reform, it might be open to a New Zealand court to develop the common law in reliance on Red Sea Insurance to permit more flexibility in this context also.

10.3 Where is a tort committed? The preceding paragraphs of this section focus on the country in which the "act" giving rise to the tort claim was done. This is the language used in the leading English cases. But as the cases in relation to defamation proceedings make clear, the country in which the defendant was situated at the time of the wrongful act will not necessarily be the country in which the wrongful act is treated as having occurred. In defamation proceedings, for example, the relevant "act" has been treated as publication - so where a defamatory letter about a New Zealand resident is written in Australia and posted to New Zealand, where it is read, causing damage to that person's reputation in New Zealand, there has been an act in New Zealand and a claim can be brought under New Zealand law: Dow Jones & Co Inc v Gutnick [2002] HCA 56, 194 ALR 433; applied in New Zealand (but finding that no publication had occurred here and therefore dismissing the claim at the jurisdictional stage) in Nationwide News Pty Ltd v University of New/ands CA 202/04, 9 December 2005. In addressing the question where the tort is committed in other contexts, the overall test is that propounded by the Privy Council in Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 at 468: It is not the right approach to say that, because there was no complete tort until the damage occurred, therefore the cause of action arose wherever the damage happened to occur. The right approach is, when the tort is complete, to look back over the series of events constituting it and ask the question, where in substance did this cause of action arise?

•

how the exception will be applied in such cases - what factors will determine the country that has the most significant relationship with the occurrence and the parties, where all the relevant events occur in "cyberspace"? 263

The answers provided by the courts are likely to be pragmatic, and to focus on the appropriateness of the issue in question being regulated by the law of the relevant country. A person who takes steps in country A (where hacking is not civilly actionable) to hack into a server in country B (where it is a tort) is unlikely to persuade the courts of country B or, it is suggested, country A, that a claim should fail either because double actionability should apply, or because the relevant acts should be treated as having occurred in country A. On the other hand, if X Ltd is an ISP based in country A and under the law of country BX Ltd could be vicariously liable for the acts done by V, but X Ltd is protected from liability under the law of country A, the courts of country A would almost certainly dismiss a claim against X Ltd. The reaction of the courts of country B, applying the common law test, is harder to predict: but it seems likely that there is not enough in the facts to displace the double actionability rule, so X Ltd would be protected from liability.

10.4 Accident compensation New Zealand's accident compensation legislation gives rise to a number of interesting private international law issues. A seminar which focuses on cross-border transactions is not the appropriate context in which to explore these issues, but a general discussion may be found in Shapira, "New Zealand Accident Compensation and the Foreign Plaintiff: some conflict of law problems" (1980) 12 Ottawa LR 413. The analysis of the legislation's effect at [1983] NZ Recent Law 232-234 is also helpful.

There is a helpful recent discussion of how to apply this test (in the context of a claim in New South Wales for personal injury sustained in New Zealand as a result of asbestos products manufactured in New South Wales) in Amaca Pty Ltd v Frost [2006] NSWCA 173, (2006) 67 NSWLR 635, at [10] - [43] per Spigelman CJ. 262 The challenges involved in locating the place of a tort seem likely only to increase as the ~nternet mak~s it ever easier to commit a range of torts at a distance - such as hacking m~o a foreign company's server and destroying or altering data, or making misrepresentations on a website to induce entry into investment contracts, or putting a computer virus into circulation. Online torts of this kind pose a number of issues that the law has only just begun to grapple with, including:

•

where online statements are to be treated as being made;

•

where other acts at a distance are to be treated as occurring - for example, a New Zealand student hacking into a server the physical location of which is in Australia (though this is unknown to the hacker), which hosts the e-commerce site of a Canadian company;

262

F or_ more deta1·1 ~ d d. 1scuss1on . . o f sp_ecific torts see Mclachlan and Nygh (eds) Transnational Tort litigation: Jurisd1ct1onal Prmc1ples (Oxford University Press, Oxford, 1996) and see also Puttick v Tenon Ltd [2008] HCA 54 (2008) 250 AlR 582. '

146

263

See further Mclachlan 'From Savigny to Cyberspace: does the internet sound the death-knell for the conflict of laws?' (2006) 11 Media & Arts Law Review 418.

147

NZLS CLE Seminar • Private International Law Goddard and Mclachlan • Statutory Causes of Action

11. STATUTORY CAUSES OF ACTION

In New Zealand and other common law jurisdictions the last thirty years have seen a proliferation of statutes which confer a right to bring a civil action. The cause of action may be a new one, or it may be a codification of a common law cause of action. Important examples in New Zealand include the Fair Trading Act 1986, the Commerce Act 1986 and the Consumer Guarantees Act 1993. In civil law countries, of course, all causes of action could be described as having a "statutory" basis. Some very important questions of private international law, which are sometimes overlooked, arise when: (a) a person brings an action in New Zealand in reliance on a New Zealand statute which confers a right of action, and the circumstances on which the claim is based are not purely "domestic" - for example, where compensation is sought in relation to an act done outside New Zealand; or (b) a person brings an action in New Zealand in reliance on a statute of a foreign country which confers a right of action. The claim may relate to events which took place in the foreign country or in New Zealand, or in some third country.

11.1

Action based on a New Zealand statute for a wrong done outside New Zealand

Where a New Zealand statute expressly provides that it applies in relation to acts which take place outside New Zealand, a plaintiff who can make out the statutory ingredients of the claim will be entitled to succeed even though one or more of these "ingredients" took place overseas. One example of such a provision is s 3 of the Fair Trading Act 1986, which provides: 3 Application of Act to conduct outside New Zealand

This Act extends to the engaging in conduct outside New Zealand by any person resident or carrying on business in New Zealand to the extent that such conduct relates to the supply of goods or services, or the granting of interests in land, within New Zealand.

The Act would apply to a misleading statement made by a New Zealand based developer to an Australian audience at a presentation in Sydney in relation to a timeshare scheme in Queenstown, for example. More controversial is its application to conduct here relating to the supply of goods or services abroad, an important question that has so far only been considered in a preliminary way at first instance. 264 So, too, s 4(1) of the Commerce Act provides that it "extends to engaging in conduct outside New Zealand by any person resident or carrying on business in New Zealand to the extent that such conduct affects a market in New Zealand."

264

148

Marlborough Perna Ltd v United Fisheries Ltd HC Christchurch CP 145/93 , 13 May 1993; Douglas Pharmaceuticals Ltd v Nutripharm New Zealand Ltd HC Auckland CP 515/97 23 December 1997,; Containerlift Services Ltd v Maxwell Rotors Ltd (No 2) HC Auckland CIV-2003-404-3108, 3 October 2003; and KA (Newmarket) Ltd v Hart HC Auckland CP 467 /SD0 I, 4 July 2002.

149

Goddard and Mclachlan • Statutory Causes of Action

NZLS CLE Seminar • Private International Law

In such cases, the territorial scope of the statute will be interpreted strictly. Express language or necessary implication is required to achieve extraterritorial effect for a statute. It is for Parliament and not the courts to decide what extraterritorial effect a statute should have: Poynter v Commerce Commission [2010] NZSC 38, [2010] 3 NZLR 300; applied in Commerce Commission v Deutsche Bahn AG HC Auckland CIV-2010404-005479, 12 October 2011.

11.2 Action in New Zealand based on a foreign statute A plaintiff may in some circumstances sue in a New Zealand court in reliance on a cause of action which arises under a statute of another jurisdiction. The claim will not fail simply because the cause of action is not known to New Zealand law (see Phrantzes v Argenti [1960] 2 QB 19; Loucks v Standard Oil Co (1918) 120 NE 198). The Courts of New Zealand will strive to give effect to the law applicable to the transaction in question, unless it would be contrary to the law and policy of the lex fori to do so, and subject to the need to find a comparable and available domestic remedy: Partnership Pacific Ltd v Mellsop (1991) 5 PRNZ 619; Rimini Ltd v Manning Management and Marketing Pty Ltd [2003] 3 NZLR 22. A statute of a foreign country can be relied upon by a plaintiff only if the plaintiff's claim is first characterised in accordance with normal New Zealand rules (see section 8.3 above) and the relevant choice of law rule selects the law of that foreign country as the law governing the issue. Certainly, this is the approach English courts have generally taken to determine whether or not the code of a civil law country applies.

New Zealand, for consideration under New Zealand law, of both the infringing act, and the intellectual property infringed": Kabushiki Kaisha Sony Computer Entertainment Inc v Van Veen (2006) 71 IPR 179 (MacKenzie J, HC, Wellington). In England (where the double actionability rule no longer applies), the Supreme Court has decided that Potter v Broken Hill should not be followed (at least in the case of copyright and other unregistered intellectual property rights) and that there could be no objection in principle to an English court applying foreign law to a claim of breach of a foreign copyright: Lucasfilm Ltd v Ainsworth [2011] UKSC 39, [2012] 1 AC 208 . These problems would be much alleviated by the adoption of a straight-forward lex loci delicti rule, which would enable the New Zealand court to apply the law of the place where the wrong was committed, subject simply to the ordinary limitations, such as those arising from the substance/procedure distinction and the public policy exception. Such an approach would not deal with causes of action that cannot properly be characterised even in a broad internationalist sense - as tortious or delictual in nature. In such cases, the courts may have to develop new choice of law rules, as suggested by Mance LJ in Raiffeisen Zentralbank 6sterreich AG v Five Star General Trading LLC [2001] QB 825 (CA) (see above section 8.3(a)). But it would provide a more straightforward means of dealing with the majority of civil claims, irrespective of the source of the foreign cause of action.

The problem with this approach is that the preliminary step of characterising an issue is particularly difficult in the case of some foreign statutory causes of action. A New Zealand court attempting to characterise the daughter's claim for a dowry in Phrantzes v Argenti, would immediately encounter the problem of deciding which of the established categories of claim to fit it into. Is it a tort claim, a contract claim, or something else? To describe the claim as either tortious or contractual in the traditional sense is a Procrustean exercise. It might be possible to treat "torts" as a general residual category of civil actions arising by operation of law, including statutory causes of action. This is what the High Court of Australia thought in John Pfeiffer v Rogerson (2000) 203 CLR 503 at 519-520. But then the New Zealand court should not simply apply Greek law: the "tort" claim should succeed only if there is a good claim in respect of the "wrong" under New Zealand law, and it is also actionable under Greek law. There is an additional potential problem of applying foreign statutory causes of action within the context of the common law double actionability rules for torts if such causes of action are themselves territorially limited. This is well illustrated by the tort of breach of intellectual property rights. 265 As such rights are territorially limited in their operation, it had been thought that the commission of an act in a foreign country, even if it were a breach of the intellectual property legislation there, would nevertheless fail the double actionability test because such an act would not constitute a breach of the intellectual property law of the forum or would otherwise be non-justiciable as a local right: Potter v Broken Hill Pty Ltd (1906) 3 CLR 479. However, a New Zealand court has been prepared to read the first limb of the double actionability rule so as "to effect a notional transfer to 265

See generally Fawcett and Torremans Intellectual Property and Private International Law (2nd ed Oxford University Press, Oxford, 20 I I). '

150

151

NZLS CLE Seminar • Private International Law

Goddard and Mclachlan • Property - An Outline

12. PROPERTY -AN OUTLINE

"The general rule, which is subject to exceptions, ... [is] that issues as to rights of property are determined by the law of the place where the property is": MacMillan Inc v Bishopsgate Investment Trust pie (No 3) [1996] 1 WLR 387, 399. Some of the most interesting questions of private international law arise in connection with transfers of movable property, where competing claims to title are advanced in reliance on the laws of different jurisdictions in which the property is, or has been, located. The very question of where property is located is itself a difficult one in the case of intangible movables. Questions concerning immovable property tend to present less difficulty. This booklet only sets out the barest outline of the property law issues that can arise in international transactions, and does not address related questions of succession to property or family law property issues. A more detailed treatment can be found in Dicey Part Five, Cheshire & North Part VI and Nygh Part VI.

12.1

Classifying property as movable or immovable

As mentioned in section 8 above, for private international law purposes the common law classifies property as movable or immovable. In many cases, whether property is movable or immovable is a simple question of fact. Difficulties arise principally in relation to rights, obligations and documents connected with immovable property. The distinctions drawn by New Zealand law between immovable and movable property are for the most part the same as at English law, except that in New Zealand a mortgage of land under the Torrens system is (for some purposes at least) regarded as movable (Re O'Neill [1922] NZLR 468; Re Greenfield [1985] 2 NZLR 662; Dowson v Lloyds Bank NZA LtdHC Wellington CP 744/90, 13 March 1991 at pp 31-35; Nippon Credit Australia Ltd v Girvan Corporation New Zealand Ltd (1991) 5 PRNZ 44). New Zealand law does not classify property located in another country as immovable or movable according to the same distinctions which it draws in relation to property located in New Zealand. Under New Zealand law, the law of a country where a thing is situated determines whether that thing will be classified as movable or immovable, and whether any right, obligation or document connected with that thing is an interest in a movable or an immovable (Dicey r 119). On this approach, a New Zealand court would treat a mortgage of land in England as an interest in an immovable.

12.2 Where is property situated? Unsurprisingly, land is treated as situated in the country in which it is located, and a chattel is treated as situated in the country in which it is physically located at any given time (Dicey r 120(2) and (3)). 266

266

152

See Dicey at 1130 - 1131 for exceptions in relation to merchant ships and civil aircraft.

153

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Property- An Outline

(b) a judgment debt is situated (for some purposes at least) in the country where the judgment is recorded;

For more detailed discussion of these categories of intangibles, and for a discussion of the location of other forms of intangible, see Dicey at 1118 - 1128. For the complex issues that arise in relation to securities held through depositories such as Austraclear or Euroclear, or other intermediaries, see Dicey at 1124-1125, Cheshire & North at 12471252. The uncertainty on this point was so acute that the Hague Conference on Private International Law started work in 2000 on a convention to address these issues. Through the adoption of a "fast-track" procedure the Convention on the Law Applicable to Certain Rights in respect of Securities Held with an Intermediary was adopted and opened for 267 signature and ratification in December 2002.

(c) a debt due on a deed or other specialty is treated by English law as situated in the country where the deed itself is situated from time to time. It is not clear how far this is the law in New Zealand;

12.3 Transfers of movables

Choses in action are said to be situated in the country where they are properly recoverable or can be enforced (Dicey r 120(1)). The rules normally applied in relation to different classes of chose in action are: (a) a debt (other than a judgment debt, specialty debt or debt incorporated in a security transferable by delivery) is situated in the country where the debtor resides. An account with a bank is situated at the branch where the account is kept;

(d) negotiable instruments and securities transferable by delivery, with or without endorsement, are situated in the country where the paper representing the security is located at any given time; (e) a claim under an irrevocable letter of credit is situated in the place where it is payable against documents; (f) shares in a company are normally treated as situated in the country where, under the law of the country of incorporation, they can be effectively dealt with as between the current owner and the company: Dicey [22-044]. A share in a company incorporated in New Zealand will be treated as situated in New Zealand, unless it is registered on a branch register kept outside New Zealand (Re Terry (deceased)_ [1951] NZLR 30). Ifa share is registered on a branch register in a country other than New Zealand, it will be treated as situated in the country in which that branch register is kept. The law of that country will have jurisdiction over the branch register and could, for example, compel registration of a transfer of shares registered on the branch register. The law of the country of incorporation can however override the law of the country where the branch register is kept or revoke the attributed location, and prevent or effect a transfer of shares registered on that branch register (see Dicey at 1125 - 1127). Bearer shares are situate where the share certificates are kept: MacMillan; (g) a right of action in contract or tort is situated in the country where the action may be brought; (h) the location of an interest under a trust depends upon whether, under the law governing the trust, the beneficiary has an interest in the trust property or merely a right to bring an action against the trustees to compel them to perform their duties. If the beneficiary has an interest in trust property, that interest is situated in the country in which the property is located. If the beneficiary has only a right of action, the interest under the trust is located where the action may be brought, as with a claim in contract or tort; (i) the goodwill of a business is situated in the country where the premises to which the goodwill is attached are located. This rule will be of little assistance in the online environment: it is far from obvious how it would be applied to a delocalised business with a global reputation and global goodwill. A pragmatic approach would be to look to the principal place of business of the enterprise, which will often be its administrative base rather than a "shopfront"; (j) patents and trademarks are situated in the country where they can be effectively transferred under the law governing their creation.

(a)

The validity of a transfer of a tangible movable, and its effect on the proprietary rights of the parties thereto and of those claiming under them in respect thereof are governed by the law of the country where the movable is at the time of the transfer (lex situs). (Dicey r 124: see the possible exception relating to goods in transit at 1170-1171. See also Cheshire & North Chapter 29). Once title to a tangible movable is established in accordance with the above rule, a New Zealand court will continue to recognise that title wherever the movable is located, until it is displaced by a new title acquired under the law of a country in which it is located (Dicey r 125). A good example of the operation of these rules is that if goods are stolen in New Zealand, and the thief then removes the goods to another country and sells them there, New Zealand law will recognise the title of the purchaser from the thief if, and only if, the law of the country in which the goods were sold would treat the sale as giving the purchaser good title (compare Winkworth v Christie, Mason & Woods Ltd [1980] Ch 496). This rule makes practical sense in the context of ordinary transfers of title to movable property in commercial transactions. The law of the place where the property is at the time of transfer should determine whether transfer is effective. Even in the case of stolen goods, where it can be necessary to determine title as between two innocent parties (the original owner and the bona fide purchaser), different legal systems strike the balance differently, and application of the lex situs provides for certainty of title in commercial trading. However, in some contexts, the rule can work real injustice. For example, in the specific context of cultural heritage objects (the subject-matter of Winkworth v Christies), the lex situs rule can operate as a licence to encourage trafficking in antiquities. This rule has therefore been modified in the case of cultural heritage objects by international convention. New Zealand acceded to the UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects 1995 in 2007. Section l0E Protected Objects Act 1975 (inserted by amendment on 1 May 2007) imposes an obligation on the person in possession of a stolen protected foreign object to return it to its rightful owner which is designed to override the lex situs rule in such cases. Difficult questions may arise in connection with conditional sales and chattel mortgages, particularly where there are statutory registration requirements in one or more of the 267

154

Tangible movables

The Convention has to date been ratified only by Mauritius and Switzerland.

155

NZLS CLE Seminar• Private International Law

Goddard and Mclachlan • Property - An Outline

Zealand, the action could be stayed or dismissed on grounds of forum non conveniens under r 15.1.

countries concerned. The same principles apply, but much will tum on the interpretation of the relevant registration statutes. For an analysis of the various issues which may arise (see Dicey at 1174-1178). (b)

The English courts have not taken this approach, but have held that they have no jurisdiction in proceedings principally concerned with a question of title to, or the right to possession of, immovable property situated outside England unless:

Intangible movables

The question of whether a debt or other intangible is capable of being assigned, and in what circumstances, is governed by the proper law of the debt, or the law under which the intangible was created. That law also governs the relationship between the assignee and the debtor. Subject to questions of whether or not the intangible is capable of assignment, the validity of an assignment of a debt or other intangible as between assignor and assignee is governed by the proper law of the contract of assignment. See generally Dicey r 126, Cheshire & North chapter 30.

12.4 Transfers of immovables All rights over, or in relation to, an immovable are governed by the law of the country where the immovable (land) is situated. The proper law of a contract in relation to an immovable will often be the law of the country where the immovable is situated. If it is not, however, the normal rules still apply to such a contract: in particular, its validity, interpretation and effect will be governed by its proper law. See generally Dicey r 115, Cheshire & North chapter 28: note, however, that the discussion of the law applicable to contracts in relation to immovables in each text refers to the Rome Convention, so is not directly applicable in New Zealand.

12.5 Jurisdiction in relation to immovables The English courts have developed curious rules of jurisdiction in relation to immovable property, which have been treated as applicable in New Zealand. A New Zealand court has jurisdiction to hear proceedings raising questions of title to land in New Zealand. Rule 6.27(e) permits service of proceedings out of New Zealand without leave where the subject-matter of the proceeding is land situated in New Zealand, or any act, deed, will, instrument or thing affecting land in New Zealand. It is hard to imagine a case in which New Zealand will not be the forum conveniens for such a proceeding. The more difficult question is whether a New Zealand court has jurisdiction to hear proceedings concerned with a question of the title to, or right to possession of, immovable property situated outside New Zealand. In principle, the position ought to be that: (a) the New Zealand court will have jurisdiction if proceedings are served on a defendant in New Zealand, or out of New Zealand without leave under r 6.27, or with leave under r 6.28; (b) the New Zealand court will not, however, normally be the forum conveniens to try issues relating to foreign land. This means that the court is unlikely to grant leave to serve such proceedings out of New Zealand under r 6.28, and if they have been served out of New Zealand in reliance on r 6.27 or 6.28 and there is a protest to jurisdiction, that protest is likely to succeed. Where jurisdiction is founded on service in New

(a) the action is based on a contract or equity between the parties; or (b) the question has to be decided for the purpose of the administration of an estate or trust and the proceeding concerns movables and immovables in England as well as immovables outside England. This rule, known as the "Mo