Door open to interim relief against foreign defendants

17 October 2019

A recent decision by the Court of Appeal has established that New Zealand courts may grant interim relief against overseas defendants, even when proceedings have not been served or the defendant is protesting jurisdiction.1

The background

Acting on complaints by consumers, the Commerce Commission last year brought proceedings against Viagogo AG, a Swiss ticket reseller trading in New Zealand, alleging that it had delivered false guarantees in relation to tickets and had misrepresented their scarcity and price.

The Commission sought an interim injunction in the High Court restraining Viagogo from making these representations. At the time it brought its application, it had not served its claim on Viagogo in Switzerland. Under Swiss law, service is valid only if conducted through diplomatic channels – a process that can take several months.

The High Court held there was no jurisdiction, relying on the principle cited in Discovery Geo Corporation v STP Energy Pte LTD that “jurisdiction at heart is dependent on valid service on the defendant”.2 (Chapman Tripp acted for the respondent in that case).

The Commission appealed. Between the High Court judgment and the hearing of the appeal, Viagogo was served but protested jurisdiction.

Court of Appeal decision

The Court of Appeal allowed the appeal, finding that:

  • there is no reason to suggest that High Court Rule 7.53, which expressly recognises that interim relief can be granted before a proceeding is filed in cases of urgency, should operate differently with respect to foreign defendants
  • the purpose of granting interim relief is to preserve “the ability of the New Zealand court to do effective justice between the parties” and this could be “irretrievably compromised” if a party was prevented from obtaining relief prior to executing valid service,3 and, similarly
  • a protest to the jurisdiction of a New Zealand court should not prevent an order of interim relief – although, when determining whether to grant it, the court should consider whether there is a “real prospect” that final relief against the defendant will be granted as this will bear on whether it is in the interests of justice.

Finally, the Court noted that rule 6.8, which deals with substituted service, cannot be used as a means of getting around the ordinary rules for service outside of New Zealand. Reasonable efforts must have been made to serve the defendant before substituted service is allowed, an allowance to be made rarely in the context of interim relief.

Chapman Tripp comment

The Court of Appeal’s judgment is founded in pragmatism – recognising that in an increasingly globalised world, cross-border disputes are much more common. But, while it has opened the door to applications for interim relief against foreign defendants before service, it has not thrown it wide open.

A decision to grant interim relief is inherently discretionary, and courts will undoubtedly remain alive to the attendant dangers. Practically, on the Court of Appeal’s approach, the “real prospect” test involves a degree of pre-judging jurisdiction over the merits of the dispute, in circumstances where defendants will almost always be on the back foot where the application is made without notice.

The Court of Appeal, sensitive to this concern, emphasised that without notice applications should be rare, and applicants should make every effort to at least informally notify the defendant.

Our thanks to Jared Papps and Marcel Lister for preparing this Brief Counsel.

1 Commerce Commission v Viagogo AG [2019] NZCA 472.

2 [2012] NZHC 3549, (2012) 21 PRNZ 381 at [39].

3 At [74].

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