Proposals to improve court judgment enforcement

A trans-Tasman working group has released a discussion paper with proposals for improving the enforcement of court judgments between Australia and New Zealand.

Associate Justice Minister Marian Hobbs said these proposals could lead to much greater co-operation between Australia and New Zealand in civil court proceedings.

"The ideas and proposals in this discussion paper could benefit organisations that conduct business across the Tasman and individuals caught up in trans-Tasman legal disputes," Marian Hobbs said. "New Zealand and Australia have a great deal of trust and confidence in each other's legal systems, which share a common heritage. This trust and confidence is reflected in existing legal co-operation regimes and these proposals will build on their success.

"Greater co-operation could help resolve trans-Tasman disputes more efficiently, effectively and at a lower cost, ultimately further reducing barriers to trans-Tasman trade. It will also help people resolve some personal disputes where one party has moved across the Tasman (eg, matrimonial property disputes)."

The discussion paper also proposes changes that would make it possible to enforce civil penalties and certain criminal fines for regulatory offences across the Tasman. This means, for example, that an organisation based in New Zealand but operating in Australia could not escape penalties or fines imposed by Australian courts, and vice versa. These proposals will increase the effectiveness of each country’s regulatory rules in areas where this is of mutual benefit – for example, the rules applying to securities offerings to the public.

The Trans-Tasman Working Group was established by the Australian and New Zealand Prime Ministers in 2003 and is made up of senior officials from both countries.

Submissions on the proposals are invited by 4 November 2005. The Working Group will consider the submissions it receives and will then make recommendations to the Australian and New Zealand Governments.

Copies of the discussion paper are available at www.justice.govt.nz.
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Trans-Tasman Court Proceedings and Regulatory Enforcement:
A Public Discussion Paper by the Trans-Tasman Working Group

Questions and Answers

What is the purpose of this work?

The Working Group has been considering the potential for greater co-operation in relation to civil proceedings and regulatory enforcement. Developing a more coherent framework for trans-Tasman legal co-operation in civil proceedings could help:
·Resolve trans-Tasman disputes more efficiently, effectively and at lower cost.
·Reduce barriers to trade.
·Contribute to the success of CER.

We currently handle cross-border disputes involving Australia with the same caution as other countries with unfamiliar legal systems. Yet New Zealand and Australia have a great deal of trust and confidence in each other’s legal systems, which share a common heritage. This trust and confidence is already reflected in existing legal co-operation regimes with Australia and it is now time to build on their success.

What is the practical impact of these proposals?

There are a number of situations where there are problems enforcing civil court judgments, civil penalties and certain criminal fines across the Tasman. The proposals would resolve these problems.

The practical impact is best illustrated by some examples of the current problems.

Example 1 – Enforcement of judgments

Bill builds a house in New Zealand, sells it to Anna and moves to Australia. Anna later finds a problem with the house and starts court proceedings here against Bill. The proceedings are served on Bill in Australia but he ignores it and takes no action. Anna obtains a court judgment by default against Bill for payment of damages. Anna now wants to enforce that judgment against Bill in Australia but cannot do so. This is because Bill was served out of New Zealand and did not appear before the New Zealand court.

Example 2 – enforcement of certain criminal fines

S Ltd is an Australian based company. It offers an investment scheme to New Zealanders. There is a misleading statement in its investment offer documents. S Ltd is registered as an overseas company in New Zealand and has appointed an agent to accept service of legal proceedings in New Zealand. S Ltd is prosecuted under the Securities Act and the Court imposes a fine. However, because S Ltd has moved all its assets out of New Zealand and back to Australia, it is not possible to enforce payment of the fine.

Example 3 – Limits on enforcing non-money judgments

Boris and Jane, a married couple in New Zealand, decide to separate. They go to the New Zealand Family Court for a decision about how to divide their relationship property. The Court orders Boris to return jewellery to Jane, but Boris moves to Australia taking it with him. Rules about enforcing judgments between Australia and New Zealand only apply to judgments about money. The New Zealand Court order can’t be enforced in Australia because it requires Boris to do something (return property), not to pay money. Jane therefore can’t enforce the judgment.

Do the proposals affect only businesses?

No. While they do have important implications for businesses with dealings across the Tasman, the proposals will also help people resolve some personal disputes where, for example, one party has moved across the Tasman (see the examples above).

What are the proposals?

The Working Group has identified a number of problems in civil proceedings with a trans-Tasman element, and in the enforcement of regulatory regimes. The information below describes the problems and the Working Group’s proposed solutions.

1. Enforcing court judgments
PROBLEM
·Service on defendant means court can hear a case.
·Defendant can be served overseas, if conditions met.
·Final money judgments enforceable in the other country.
·But if defendant served overseas and takes no steps in the proceedings, judgment not enforceable in other country.
PROPOSED SOLUTION:
·Allow proceedings in one country to be served in the other, without additional requirements.
·Defendant not able to ignore proceedings but could apply for a stay on grounds a court in other country is appropriate to hear dispute.
·Judgments registered and enforceable in other country.
·Public policy grounds only basis for refusing enforcement.

2. Final non-money judgments
PROBLEM
·Only final money judgments can be enforced across the Tasman.
·Other orders (eg order requiring defendant to return a specific item of property) are not enforceable.
PROPOSED SOLUTION:
·Extend range of enforceable judgments to include those requiring someone to do, or not do, something.
·Some exclusions, eg orders about wills and care/welfare of children.
3. Interim relief in support of foreign proceedings
PROBLEM
·Interim relief (eg freezing assets until court makes final decision) not available from a court in one country to support proceedings in the other country.
·Instead need to start new full proceedings in country where interim relief sought.
PROPOSED SOLUTION:
Give courts in both countries statutory power to grant interim relief in support of proceedings in the other country.
4. Tribunal order
PROBLEM:
·Many tribunals decide disputes like a court.
·Tribunal orders are not enforceable in the other country.
PROPOSED SOLUTION:
·Allow some decisions of particular tribunals to be enforced in the other country.
·Allow some tribunals to use the service proposal in Issue 1.

5. Forum non conveniens rules
PROBLEM:
·New Zealand and Australia apply potentially inconsistent ‘give way’ rules if courts in both countries could decide a dispute.
·If proceedings on the same dispute in each country, possible neither court would give way.
PROPOSED SOLUTION:
Adopt a common statutory test requiring a court in one country to give way if a court in the other country is the appropriate court to decide the dispute.

6. Leave requirement for trans-Tasman subpoena
PROBLEM:
·Subpoena (summons requiring a person to give evidence in court) from one country can be served on a witness in the other. Permission of a High Court judge required.
·But District Court proceedings require permission from High Court, adding cost, complexity and delay.
PROPOSED SOLUTION:
Allow lower court judges to give permission to serve a subpoena across the Tasman in proceedings before that court or a tribunal.

7. Court appearance by video link
PROBLEM:
·Video links already used for trans-Tasman evidence.
·Greater use could reduce cost and inconvenience of physically attending a court in the other country.
PROPOSED SOLUTION:
·Specifically allow parties or counsel wishing to appear by technology to do so with court’s agreement (civil cases).
·Allow as of right when applying to stay proceedings in the other country (under Issue 1).

8. Enforcing civil penalty orders
PROBLEM:
·Civil pecuniary penalty orders from a court in one country not enforceable in other country.
·Long-standing rule against enforcing another country’s penalties but strong mutual interest in the effectiveness each other’s regulatory regime.
PROPOSED SOLUTION:
·Allow all civil pecuniary penalty orders from one country to be enforced in the other (Issue 1 regime).
·Public policy exception to enforcement.
·A country could exclude particular civil penalty regimes from the other if it wished.

9. Enforcing fines for particular regulatory offences
PROBLEM:
·Criminal fines are not enforceable in the other country as a penalty.
·Impairs effective enforcement of regulatory regimes in which each country has a strong mutual interest.
PROPOSED SOLUTION:
·Allow criminal fines under regulatory regimes that impact on the integrity and effectiveness of trans-Tasman markets to be enforced in other country.
·Enforce in same way as a civil judgment debt.
·Public policy exception to enforcement available and enforce through High Court (or Australian equivalents).

10. Trans-Tasman subpoenas in criminal proceedings
PROBLEM:
·Trans-Tasman evidence regime subpoenas not available in criminal proceedings.
·Must use less convenient procedures such as Mutual Assistance in Criminal Matters legislation.
PROPOSED SOLUTION:
·Extend trans-Tasman subpoenas regime to criminal proceedings.
·Adequate safeguards in the regime’s existing protections (eg leave of judge, applying to set aside if complying causes hardship).

What regimes for legal co-operation already exist between New Zealand and Australia?

New Zealand and Australia have already put in place several innovative regimes for legal co-operation.

·In 1994 both countries enacted legislation that allows a subpoena (a summons requiring a witness to give evidence in court) issued by a court in one country to be served in the other country, in certain types of civil proceedings. This legislation also enables courts to take evidence and hear submissions by video link or telephone conference from a person in the other country. This regime has worked very successfully.

·Traditional common law rules mean that countries will usually refuse to enforce tax judgments from another country. However, this rule has not applied between Australia and New Zealand since 1992.

·New Zealand also doesn’t normally enforce judgments issued by “inferior courts” of another country. An “inferior court” is one below the level of what we refer to as the High Court. However, this rule has not applied between Australia and New Zealand since 1992.

Do the Working Group’s proposals encroach on Australia or New Zealand’s sovereignty?

No. The proposals recognise that Australia and New Zealand are very comfortable with the way each other’s legal system works. Significant gains can be made by not treating each other as cautiously as we do countries whose legal systems are not so familiar.

There is no suggestion of integrating the justice systems of the two countries, or that our legal systems should work in exactly the same way. Australia and New Zealand’s legal systems will remain independent of each other, it’s just that some of the rules about how they co-operate with each other would be relaxed.

Some people might consider the proposals to enforce each other’s civil penalties, and certain criminal fines, as encroaching on sovereignty. This is because there have been traditional common law rules about not enforcing the punitive laws of another country. However, the Working Group considers that both Australia and New Zealand can benefit significantly from these proposals, particularly by ensuring that organisations or individuals operating on a trans-Tasman basis cannot avoid penalties or fines in one country by, for example, keeping their assets in the other. It has proposed safeguards that allow each country to protect its sovereignty.

What is the process after the Working Group receives submissions on its proposals?

The Working Group will consider all the submissions it receives. It will then reach an agreed position and make recommendations to both countries’ governments.

If both governments accept the Working Group’s recommendations, their agreement could be recorded in a treaty or other formal arrangement. Legislation could then be developed to implement the agreement.

There would be further consultation on the detailed implementation of the agreement at that stage.

The Working Group anticipates being in a position to make recommendations to both countries’ governments during 2006.

Who is the ‘Working Group’?

The Working Group was set up by the Australian and New Zealand Prime Ministers in 2003.

It is made up of senior officials from Australian and New Zealand government departments, including:

In New Zealand:
·Ministry of Justice.
·Ministry of Economic Development.
·Ministry of Foreign Affairs and Trade.
·Department of the Prime Minister and Cabinet.

In Australia:
·Attorney-General’s Department.
·Treasury.
·Department of the Prime Minister and Cabinet.