{"id":261,"date":"2023-03-13T10:01:11","date_gmt":"2023-03-12T21:01:11","guid":{"rendered":"https:\/\/blogs.otago.ac.nz\/conflicts\/?p=261"},"modified":"2023-03-13T10:01:11","modified_gmt":"2023-03-12T21:01:11","slug":"a-first-for-the-nz-conflict-of-laws-court-grants-an-interim-anti-enforcement-injunction","status":"publish","type":"post","link":"https:\/\/blogs.otago.ac.nz\/conflicts\/a-first-for-the-nz-conflict-of-laws-court-grants-an-interim-anti-enforcement-injunction\/","title":{"rendered":"A first for the NZ conflict of laws: court grants an (interim) anti-enforcement injunction"},"content":{"rendered":"

In an exciting new conflict of laws case, the New Zealand High Court has granted an interim anti-enforcement injunction in relation to a default judgment worth USD136,290,994 obtained in Kentucky (Kea Investments Ltd v Wikeley Family Trustee Limited <\/em>[2022] NZHC 2881). The decision was made in November last year but has only now been released. It seems to be the first time that the New Zealand court has granted an (interim) anti-enforcement injunction.<\/p>\n

The case involves allegations of \u201ca massive global fraud\u201d perpetrated by the defendants \u2013 a New Zealand company (Wikeley Family Trustee Ltd), an Australian resident with a long business history in New Zealand (Mr Kenneth Wikeley), and a New Zealand citizen (Mr Eric Watson) \u2013 against the plaintiff, Kea Investments Ltd (Kea), a British Virgin Islands company. Kea alleges that the US default judgment is based on fabricated claims intended to defraud Kea. Its substantive proceeding claims tortious conspiracy and a declaration that the Kentucky judgment is not recognised or enforceable in New Zealand. Applying for an interim injunction, the plaintiff argued that \u201cthe New Zealand Court should exercise its equitable jurisdiction now to prevent a New Zealand company \u2026 from continuing to perpetrate a serious and massive fraud on Kea\u201d (at [27]) by restraining the defendants from enforcing the US judgment.<\/p>\n

The whole judgment is well worth a read. It is illustrative of the kind of cross-border fraud that private international law struggles to deal with effectively: here, alleged fraudsters using the Kentucky court to obtain an illegitimate judgment and, apparently, frustrate the plaintiff\u2019s own enforcement of an earlier (English) judgment, in circumstances where the Kentucky court is unwilling (or unable?) to intervene because Kea was properly served with the proceeding in BVI.<\/p>\n

More specifically, Gault J\u2019s decision is notable because anti-enforcement injunctions \u2013 injunctions to restrain a defendant from enforcing a judgment already obtained overseas \u2013 are rarely granted. That is because \u201cthe New Zealand Court has great respect for the work of foreign courts\u201d and \u201c[t]o grant an injunction which will interfere, even indirectly, with the process of a foreign court is therefore a strong step for which a clear justification is required\u201d (at [66]). The main exception, however, are cases involving fraud (for cases involving foreign judgments obtained in breach of an agreement, see Tiong Min Yeo \u201cForeign Judgments and Contracts: The Anti-Enforcement Injunction\u201d in Andrew Dickinson and Edwin Peel A Conflict of Laws Companion \u2013 Essays in Honour of Adrian Briggs <\/em>(OUP, 2021) 251), and Gault J accepted counsel\u2019s submission that this was \u201cone of the rare cases\u201d where an anti-enforcement injunction was justified (at [65]).<\/p>\n

Gault J considered that the case was \u201cvery unusual\u201d (at [68]). Kea had no connection to Kentucky, except for the defendants\u2019 allegedly fabricated claim involving an agreement with a US choice of court agreement and a selection of the law of Kentucky. Kea also did not receive actual notice of the Kentucky proceedings until after the default judgement was obtained (at [73]). In these circumstances, the defendants were arguably \u201cabusing the process of the Kentucky Court to perpetuate a fraud\u201d, with the result that \u201cthe New Zealand Court\u2019s intervention to restrain that New Zealand company may even be seen as consistent with the requirement of comity\u201d (at [68]).<\/p>\n

One may wonder whether the Kentucky Court agrees with this assessment \u2013 that a foreign court\u2019s injunction restraining enforcement of its judgment effectively amounts to an act of comity. In fact, Kea had originally advanced a cause of action for abuse of process, claiming that the alleged fraud was an abuse of process of the Kentucky Court. It later dropped the claim, presumably due to a recent English High Court decision (W Nagel (a firm) v Chaim Pluczenik<\/em> [2022] EWHC 1714<\/a>) concluding that the tort of abuse of process does not extend to foreign proceedings (at [96]). The English Court said that extending the tort to foreign proceedings \u201cwould be out of step with [its] ethos\u201d, which is \u201cthe Court\u2019s control of its own powers and resources\u201d (at [97]). It was not for the English court \u201cto police or to second guess the use of courts of or law in foreign jurisdictions\u201d (at [97]).<\/p>\n

Since Gault J\u2019s decision granting interim relief, the defendants have protested the Court\u2019s jurisdiction, arguing that Kea is bound by a US jurisdiction clause and that New Zealand is not the appropriate forum to determine Kea\u2019s claims. The Court has set aside the protest to jurisdiction (Kea Investments Ltd v Wikeley Family Trustee Limited<\/em> [2023] NZHC 466). In its judgment, the Court traverses a number of issues that may be of interest to readers, to be discussed in a future post. For now, it is worth noting that the Court has ordered that the interim orders continue, although the Court was not prepared to make a further order that the defendants consent to the discharge of the default judgment and withdraw their Kentucky proceedings. This, Gault J thought, was \u201ca bridge too far\u201d at this interim stage (at [98]).<\/p>\n","protected":false},"excerpt":{"rendered":"

In an exciting new conflict of laws case, the New Zealand High Court has granted an interim anti-enforcement injunction in relation to a default judgment worth USD136,290,994 obtained in Kentucky (Kea Investments Ltd v Wikeley Family Trustee Limited [2022] NZHC 2881). The decision was made in November last year but has only now been released. […]<\/p>\n","protected":false},"author":31175,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[],"tags":[],"class_list":["post-261","post","type-post","status-publish","format-standard","hentry"],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/blogs.otago.ac.nz\/conflicts\/wp-json\/wp\/v2\/posts\/261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.otago.ac.nz\/conflicts\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.otago.ac.nz\/conflicts\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.otago.ac.nz\/conflicts\/wp-json\/wp\/v2\/users\/31175"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.otago.ac.nz\/conflicts\/wp-json\/wp\/v2\/comments?post=261"}],"version-history":[{"count":0,"href":"https:\/\/blogs.otago.ac.nz\/conflicts\/wp-json\/wp\/v2\/posts\/261\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.otago.ac.nz\/conflicts\/wp-json\/wp\/v2\/media?parent=261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.otago.ac.nz\/conflicts\/wp-json\/wp\/v2\/categories?post=261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.otago.ac.nz\/conflicts\/wp-json\/wp\/v2\/tags?post=261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}