Haines v Herd

JurisdictionNew Zealand
CourtHigh Court
JudgeR M Bell
Judgment Date22 December 2015
Neutral Citation[2015] NZHC 3365
Docket NumberCIV-2014-488-187
Date22 December 2015

[2015] NZHC 3365

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2014-488-187

BETWEEN
Rodney David Haines and Kathleen Anne Norman
Plaintiffs
and
Robert John Herd
First Defendant

and

Rhumba Holdings Limited
Second Defendant
Appearances:

R Mark for Plaintiffs

D Bigio for Defendants

David Bigio, Auckland, for Defendants

Application by the defendants under r5.49(3) High Court Rules (“HCR”) (appearance and objection to jurisdiction) to dismiss the plaintiff's summary judgment application on the grounds that the Vanuatu Supreme Court was more appropriate forum — the plaintiffs had sold a vessel to the first defendant — the second defendant had guaranteed payment — the first defendant had possession of the vessel which was now in Queensland — the first defendant had not paid and the plaintiffs had taken the vessel back — they claimed damages for the losses — the plaintiffs lived in New Zealand and had business interests in Vanuatu — the first defendant was Australian with business interests and land holdings in Vanuatu — the second defendant was a Vanuatu corporation through which the first defendant held interests in land in Vanuatu — the sale agreement contained a non-exclusive jurisdiction clause in favour of Vanuatu — claim was a civil claim under of s12 Trans-Tasman Proceedings Act 2010 (TTPA) (application or Part 2) — what was the test for founding jurisdiction under the TTPA — whether Vanuatu was the appropriate forum non conveniens and the natural forum — whether the plaintiffs would be unable to obtain substantial justice in Vanuatu due to delay — whether the need to take a common law proceeding in Queensland to enforce a Vanuatu judgment was relevant.

The issues were: what was the test for founding jurisdiction under the TTPA; whether Vanuatu was the appropriate forum non conveniens and the natural forum; whether the plaintiffs would be unable to obtain substantial justice in Vanuatu due to delay; and whether the need to take a common law proceeding in Queensland to enforce a Vanuatu judgment was relevant.

Held: The TTPA and the HCR did not state a test to be applied when an Australian served with a New Zealand proceeding contended that the claim should be heard in another jurisdiction. Therefore, r1.6 HCR (cases not provided for) applied. This did not require the two stage test described in Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd to be applied unthinkingly. Some modifications were appropriate to allow for the fact that this was a TTPA proceeding. The first stage of the Wing Hung test, to found jurisdiction, required the plaintiff to establish that the case had an appropriate connection with New Zealand. But this stage was not needed as under the TTPA, Australian residents could be served as of right with a New Zealand civil proceeding even if the case had no connection with New Zealand.

While the courts have traditionally exercised jurisdiction over non-residents cautiously. That factor had less importance in civil proceedings under the TTPA, which implemented a single trans-Tasman regime involving a mutual cession of sovereignty for civil proceedings in favour of the other. An allegiance-based argument opposing a New Zealand court hearing a case would run quite contrary to the purpose of the Act. Accordingly, only the second limb would be applied. The second stage required consideration of whether there was a serious issue to be tried on the merits and whether NZ was the appropriate forum.

The plaintiffs had shown that there was a serious question to be tried. repudiation of the contract by the plaintiffs and that the proceeding was premature as the plaintiffs had not exhausted their remedies under the contract. Both issues were matters of contract law. Under cl 12.1 of the variation deed, the law of Vanuatu excluding French law applied. That included the common law as followed in Vanuatu and statutes, including English legislation still in force in Vanuatu. One of those English statutes still in force in Vanuatu was the Sales of Goods Act 1893 (UK) 56&57 Viet c 71 (on which New Zealand's Sale of Goods Act 1908 was modelled).

When considering whether there was a serious issue on the merits, it was not possible to resolve conflicts of fact. H's evidence did not at this stage of the proceeding amount to conclusive evidence as to repudiation by the plaintiffs. There was accordingly a serious issue to be tried on the question of repudiation.

The defendants argued that common law rights were not available, because the plaintiffs are confined to the remedies in cl 9. In general, the provision of an express remedy, such as cl 9, did not preclude an innocent party from invoking common law remedies. It was arguable for the plaintiffs that when a notice to remedy expired unremedied, they became entitled at common law to terminate because they had established the existence of an essential breach. That right to terminate allowed them to recover possession of the vessel at common law, as well as under the contract.

As for Rhumba Holdings Ltd, it remained liable under its guarantee following termination of the contract between the plaintiffs and H. In summary, the plaintiffs have shown that there was a serious question to be tried.

A plaintiff was not required to show that New Zealand was clearly or distinctly more appropriate. Close calls were permitted. It was also necessary to bear in mind that only relevant connecting factors had to be taken into account.

By providing that the jurisdiction was non-exclusive, the parties had left it open to sue in courts of other countries. The fact that the parties had agreed to submit to the jurisdiction of the courts of Vanuatu was relevant to the forum non conveniens question. They had accepted that Vanuatu might be an appropriate forum, even if they had not chosen it as the only appropriate forum. It placed a higher burden on the plaintiffs to show that NZ was a more appropriate than Vanuatu.

It was generally recognised that it was better for a case to be heard in the court of a jurisdiction applying its own law. In this case, that aspect was overstated. The common law in Vanuatu was broadly the same as that applied in Australia and New Zealand. There would be no any special challenges for a New Zealand court; nor would dealing with questions under the Sale of Goods Act 1893 (UK) which was in force in Vanuatu as New Zealand's Sale of Goods Act was modelled on that statute. In New Zealand the common law rules for terminating contracts continued to apply to contracts for the sale of goods.

A Vanuatu judge would be at an advantage over a NZ judge in dealing with as to whether the defendants owned and/or were able to convey land within the contract specification. That would require knowledge of the law of real property in Vanuatu. The Vanuatu legislation did not seem to coincide with New Zealand's Land Transfer Act 1952.

Given the issues, Vanuatu had the most real and substantial connection with the proceeding. While the plaintiffs were based in NZ and H in Queensland, the factual issues turning on the existence of land in Vanuatu and whether H had offered the plaintiffs land in Vanuatu that met the requirements of the variation deed make the case primarily a Vanuatu one. The choice of Vanuatu law and the non-exclusive choice of forum only reinforced that Vanuatu was the natural forum.

A delay of up to three years in the court system in Vanuatu it was not so inordinate as to amount to a denial of substantial justice. The plaintiffs would have to take the natural forum as they found it. The greater legal expenses the plaintiffs might incur in suing in Vanuatu as opposed to New Zealand did not provide grounds for holding that there would be a denial of justice in suing in Port Vila

The plaintiffs object that there was no reciprocal enforcement of judgments arrangements between Vanuatu and Australia. To enforce the judgment, they would need to bring a common law proceeding in the Queensland Courts to obtain recognition and enforcement of a Vanuatu judgment. These concerns were overstated. Summary judgment was available in the Queensland courts and H would not be in a position to defend it. The greater expense of applying for summary judgment in Queensland, as opposed to registering a New Zealand judgment under the Australian Trans-Tasman Act, did not amount to a denial of substantial justice or displace Vanuatu as the natural forum.

While the plaintiffs had shown a serious case to be tried on the merits, they had failed to show that NZ was the natural forum. The preponderance of factors favoured Vanuatu as the appropriate forum. The plaintiffs had not shown that substantial justice could not be done in Vanuatu.

The proceeding was dismissed under r5.49(4) HCR (no jurisdiction to hear and determine the proceeding).

JUDGMENT OF ASSOCIATE JUDGE R M Bell

TABLE OF CONTENTS

Paragraph No.

Parties

[3]

Facts

[4]

The appropriate forum non conveniens test

[33]

What is in issue?

[49]

Is there a serious issue to be tried on the merits?

[53]

Alleged repudiation

[56]

Does clause 9 of the variation deed provide an exclusive remedy for the plaintiffs?

[62]

The natural forum

[75]

The non-exclusive jurisdiction clause

[78]

Choice of Vanuatu law

[85]

Contested factual issues

[89]

Summary on natural forum

[95]

Will the plaintiffs be unable to obtain substantial justice in Vanuatu?

[96]

Delay

[96]

Difficulty in enforcing a Vanuatu judgment in Queensland

[106]

Result

[109]

1

Mr Haines and Ms Norman sold their Hatteras launch, It's Time, to Mr Herd. Rhumba Holdings Ltd guaranteed payment by Mr Herd. Mr Herd has not paid for the launch. Mr Haines...

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