Trans-Tasman disputes – out of which court do I sue?

Litigation

With the evolution of the ‘global economy’, disputes between parties who reside or do business in different countries are now commonplace. Disputes between New Zealanders and Australians are governed by the Trans-Tasman Proceedings Act 2010. This Act simplifies the process and reduces costs for resolving civil disputes where the parties or the subject matter of the dispute spans both countries.

The regime allows a person in New Zealand with a claim against someone in Australia to commence proceedings in a New Zealand Court and serve the Australian party in Australia without having to first show that the New Zealand Court is the appropriate court to determine the dispute (the same applies for a person in Australia commencing proceedings in Australia against someone in New Zealand).  Under the regime, however, the Australian party can apply to the New Zealand Court to halt the New Zealand proceedings on the basis an Australian Court is best suited to determine the dispute. 

We recently represented an Australian client who was served with proceedings out of the High Court in Auckland.  The general basis of the NZ party’s claim was that it had loaned our client a sum of money and, while our client had repaid that money, it had not paid interest on the loan.

While our client acknowledged that it had received money from the NZ party and the money had been paid into its New Zealand bank account, it disputed that it was a loan or that they had agreed to pay interest at all.  Rather, our client said the money advanced by the NZ party was a contribution to a partnership which undertook property developments in Perth, Australia and any return was contingent upon those developments being successful.  As the developments had not been successful due to a downturn in the Australian housing market, there were no returns to be distributed to the partners and actually, the amount it had repaid the NZ party was more than what the NZ party was entitled to receive after a final accounting of the partnership.

When filing its claim in New Zealand, the NZ party had advised the New Zealand court that its claim should be determined in New Zealand as:

  • The NZ party was in New Zealand when it agreed to advance the money to our client;
  • The money was transferred from the NZ party’s New Zealand bank account to our client’s New Zealand bank account before our client transferred it to Australia; and

  • The money our client had repaid was paid to the NZ party’s New Zealand bank account.

Our client challenged the jurisdiction of the Auckland High Court and asked the High Court to stay the NZ party’s claim on the basis that an Australian court was more appropriate.  In support of its challenge, our client said the claim should be dealt with in Australia as:

  • The money was advanced to our client for the purposes of investing in property developments in Australia;

  • The developments all took place in Australia and were subject to Australian tax laws;

  • While both parties were in Australia they had entered into a written agreement; and

  • In order to defend itself against some of the allegations made by the NZ party in relation to the alleged interest rate and property developments, our client would need to call a number of Australia based witnesses including a valuer, a banker, the real estate agents who sold the developed properties, and the purchasers of the properties.

The court acknowledged that the case was finely balanced but decided the claim should be determined in Australia as the partnership activities took place there and there were a number of Australia based witnesses that needed to give evidence about those activities.  As a result, the NZ party’s claim was stayed.  The NZ party has now commenced proceedings out of a court in Perth. 

If you are considering commencing court proceedings against someone in Australia or if someone has started court proceedings against you in Australia, you need to consider whether the claim should be determined in New Zealand or Australia.  If you are unsure or have any questions about this, please contact one of the litigation team who will be happy to assist you.

All Articles

Copyright © Cavell Leitch. All rights reserved. Redistribution is only permitted with express written permission. For enquiries please contact us. This article by its nature cannot be comprehensive and cannot be relied on by clients as advice. It is provided to assist clients to identify legal issues on which they should seek legal advice. Please consult the professional staff of Cavell Leitch for advice specific to your situation.