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Without notice injunctions against foreign defendants: Part III

By Tim Stephens (Barrister, Stout Street Chambers)

Followers of this blog will know that twice in the last 12 months or so, Jack Wass has addressed the question of whether the court has jurisdiction to grant interim relief without notice against foreign defendants. The recent decision of the Court of Appeal in Commerce Commission v Viagogo AG [2019] NZCA 472 supplies a satisfying concluding chapter to this story.

Jack’s first post had called into question a line of authority that had emerged in the 20 years following the decision of the Court of Appeal in Advanced Cardiovascular Systems Inc v Universal Specialties Ltd [1997] 1 NZLR 186 (CA). A series of High Court cases had held that a court cannot grant any form of interim relief until the respondent has been served and, further, until any actual or intimated protest has been determined (Rimini Ltd v Manning Management and Marketing Pty Ltd [2003] 3 NZLR 22 (HC); Hamilton v Infiniti Capital Andante Ltd HC Auckland CIV-2008-404-2304, 7 May 2008; and Discovery Geo Corp v STP Energy Pte Ltd [2012] NZHC 3549, [2013] 2 NZLR 122).

Jack’s second post in February of this year had addressed the decision of the High Court in Commerce Commission v Viagogo AG [2019] NZHC 187, where this line of authority had arisen for consideration again. In the High Court, Justice Courtney had followed Advanced Cardiovascular Systems and the subsequent High Court cases, and refused to grant an interim injunction on a without notice basis restraining Viagogo from targeting New Zealand consumers with its ticket reselling services. Because Viagogo was a foreign corporation, her Honour held that the Court had no jurisdiction to grant interim relief unless and until Viagogo was served.

In his second post, Jack pointed out that Advanced Cardiovascular Systems involved quite a different situation from the facts in Viagogo. Advanced Cardiovascular Systems concerned an application for summary judgment, which, although interlocutory, is an application where the substantive rights of the defendant might be finally determined. Jack believed that the question of jurisdiction must always be analysed in light of the specific context in which interlocutory relief has been sought, particularly where prior notice to the defendant may compromise the effectiveness of the court’s orders. Jack’s conclusion was that the issue justified reconsideration by the Court of Appeal.

However, the chances of overturning the case law that had become established in the High Court since Advanced Cardiovascular Systems looked slim. By its nature, the court’s jurisdiction to grant interim relief on without notice basis is almost always considered when the circumstances are extremely urgent. Submissions are prepared by counsel under significant time pressure. Judgments are delivered by judges without the opportunity for extended reflection. And any appeal is likely to be overtaken by events, so appeals are infrequently pursued.

In Viagogo the stars aligned. Service of the proceedings needed to occur through consular channels in Switzerland and was going to take six months. The Commerce Commission saw the issue as a significant matter of principle that was likely to come up again in the future. And, most importantly for our story, the Commission had now seen Jack’s posts.

Together with James Every-Palmer QC, Jack was instructed on the appeal, and set about advancing to the Court of Appeal why Advanced Cardiovascular Systems had been misunderstood, and why the High Court has jurisdiction to grant interim relief without notice, whether the respondent is physically located in New Zealand or overseas. The Court of Appeal agreed, and the appeal was allowed.

At the heart of the Court of Appeal’s analysis is the idea that the High Court has a number of different kinds of jurisdiction and, while interconnected, they are conceptually distinct. In one sense of the term, the court has jurisdiction to hear and finally determine a substantive claim against a particular person. This kind of jurisdiction—personal jurisdiction—is probably the usual sense that people have in mind when using the expression. This, however, is how problems arise. Casual use of the term “jurisdiction” can operate to import rules from one kind of jurisdiction to another, when policy reasons underlying the rules in the former kind of jurisdiction are not present in the latter.

In the case of personal jurisdiction, valid service of the proceedings on the defendant is a prerequisite for the exercise of the jurisdiction because of the finality of orders affecting the defendant which might follow. Service on a defendant may occur inside or outside New Zealand. If proceedings are served on a defendant outside New Zealand, the rules about service out become a means for determining whether the case is an appropriate one for the court to exercise the personal jurisdiction extraterritorially. The defendant can protest the personal jurisdiction of the New Zealand court, and any protest must be determined before the court can move to determine the substantive claim.

The court’s jurisdiction to grant interim relief is connected to the court’s personal jurisdiction, but it is also separate from it and has its own considerations. The power to grant interim relief is necessarily linked to the existence of a proceeding that has been, or is to be, filed. But it is not the case that the court has no jurisdiction to grant interim relief until the defendant has been served.

This is clearly so with domestic defendants: freezing orders, search orders, and the explicit language of the general provisions in rule 7.53 all contemplate interim orders being granted against a New Zealand-based defendant before service of proceedings. In the context of interim relief, the interest in formally notifying the defendant of the proceedings frequently gives way to the interest in the court being able to do effective justice between the parties when the court comes to decide the claim on its merits.

The Court of Appeal held that the position is no different with overseas defendants. There is nothing in the language of rule 7.53 or the rest of the High Court Rules which limits the Court’s broad power to grant interim relief in connection with existing or prospective proceedings in this way. The courts have routinely issued injunctions against foreign defendants before service in order to ensure that the court is able to work effective justice between the parties following trial. Freezing orders are a clear and simple example but there are any number of others.

The key insight of the Court of Appeal’s approach in Viagogo is therefore that the concept of jurisdiction is not monolithic. In the end, “jurisdiction” means the legal power of the court to hear and determine the specific question before it, and make orders in relation to that question. Different rules about the parameters of particular jurisdictions might apply, depending on their context.

This approach provides the answer to the queasiness felt by judges in the series of High Court cases that came after Advanced Cardiovascular Systems—particularly given that protests had been filed or intimated in each of those cases. In Discovery Geo Corp v STP Energy Pte Ltd [2012] NZHC 3549, [2013] 2 NZLR 122, the Judge had baulked at the concept of prima facie (or “provisional” or “interim”) jurisdiction that had been utilised in earlier authorities. The Judge said (at [43]):

I do not accept that in this case there is prima facie jurisdiction, even if that is a relevant concept … [The defendant] must have the right to file a proper protest, and evidence in support of it. The Court will then consider whether it has jurisdiction. It should not now proceed on the basis that it should make interim orders, however innocuous they perhaps might be, on the basis it might have jurisdiction.

The response of the Court of Appeal in Viagogo ([2019] NZCA 472) was to focus on the sense in which the term “jurisdiction” is used in the context of the rules governing service out and protests. The objection to jurisdiction contemplated by the rules is an objection to the court to hear and finally determine the case on its merits, not any other jurisdiction. The Court of Appeal said (at [79]):

For example, and at the risk of stating the obvious, the court has jurisdiction to hear and decide an application under r 5.49(3) to dismiss the proceeding, or an application under r 5.49(5) to set aside the appearance under protest. That is, the court has jurisdiction to determine whether it should proceed to exercise jurisdiction to determine the substantive claim. The court can make a range of orders that are ancillary to (preliminary) determinations of this kind, such as case management orders.

None of this was to say that, in the context of interim relief, the jurisdiction of the court to hear and determine the substantive claim was irrelevant. On the contrary, it is the prospect of an eventual determination in favour of the plaintiff that justifies preserving the position until the court has had an opportunity to finally determine the matter. If the court’s personal jurisdiction in respect of the substantive claim is not clear cut, the court will need to consider, as one factor in the assessment of the overall interests of justice, the likelihood of whether or not a hearing on the merits before the New Zealand court will take place.

All of which brings us to a final point, which Jack had also made in his earlier post about Viagogo. In the High Court, Justice Courtney had suggested that the plaintiff could obtain orders for substituted service if the circumstances were truly urgent. Jack had doubted that substituted service was a panacea and queried whether it should be used this way. The purpose of this procedure is to enable the court to deal with defendants who are evading service or cannot be located by any of the usual methods. It is not an alternative means of dealing with questions about extraterritorial jurisdiction. The Court of Appeal agreed, saying that as a matter of principle they did not consider that substituted service can be used to do an “end run” around the rules in relation to service of proceedings on defendants outside New Zealand.

Our story therefore ends with a welcome rationalisation of the principles and cases in this area, in a clear and comprehensive judgment that will provide guidance to counsel and judges when the issue arises in urgent circumstances again.

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