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Proposed trans-Tasman regime a double-edged sword

Proposed trans-Tasman regime a double-edged sword

ALTHOUGH SOME commentators have welcomed recommendations for an improved trans-Tasman court proceeding and regulatory enforcement regime, one top NZ firm has concerns over inequalities in the…

ALTHOUGH SOME commentators have welcomed recommendations for an improved trans-Tasman court proceeding and regulatory enforcement regime, one top NZ firm has concerns over inequalities in the proposals.

Top legal officers in both New Zealand and Australia have claimed that businesses and individuals involved in trans-Tasman civil legal cases will benefit from reforms to make the legal process easier and more affordable.

Attorney-General Philip Ruddock and Associate Minister of Justice in NZ, Clayton Cosgrove, said in a joint statement that the agreement will “enhance the effectiveness of civil court proceedings in both countries, as parties will no longer be able to avoid the consequences of a judgment by moving themselves or their assets from one country to the other”.

But according to a senior lawyer at NZ firm Bell Gully, which made critical submissions to the working group in charge of reaching the recommendations that both governments have now accepted, difficulties arise in treating NZ as another Australian state.

The interstate scheme for cross-border service of proceedings within Australia — the Service Execution of Process Act 1992 (SEPA) — is currently being offered as the basis of a future trans-Tasman scheme, a proposal Bell Gully’s Jenny Cooper says is flawed.

“We don’t have any problems with the objectives of the proposed regime, we just think it is probably using a sledgehammer to crack a nut in some respects,” Cooper said. “And we think that some of the problems created by the type of regime envisaged haven’t really been thought through enough.

“There are differences between the inter-state situation in Australia and the trans-Tasman situation,” she said. “Our point really is: that’s great that SEPA works fine in Australia, but it doesn’t necessarily mean that it is the right system to apply trans-Tasman.”

Another to make submissions to the working group, Professor Jim Davis of the Australian National University, conceded that NZ lawyers may well have reason to be concerned. “When I first read the report of the working party, because I was brought up in [NZ], I thought: ‘blimey the Kiwis are never going to accept legislation that’s based very closely on [SEPA]’,” he said.But considering the significant involvement of many NZ government departments, Davis said the opposite seems to have occurred.

Cooper isolated three major concerns in the current trans-Tasman proposals. The first is the lack of safeguards to prevent plaintiffs from starting proceedings “anywhere they like in Australian or [NZ] without restrictions”.

“Their philosophy is: the system works fine between the different states in Australia, so it will work fine for [NZ] as well. Maybe there is some risk that some defendant might be put to a bit of unnecessary expense, but we don’t think it is a major risk,” she said.

Davis said he appreciated this NZ point of view.

“It benefits plaintiffs in that way and I suppose my response is, being an academic lawyer, plaintiffs need all the benefits they can get,” he said. “It’s a matter of balancing a reduction in detail and I suppose a reduction in strict rules being in favour of much more general principles, which are in these proposals.”

Cooper also believes the trans-Tasman scheme will encourage forum shopping, increasing the time and money spent in jurisdictional disputes.

“If a plaintiff can start proceedings wherever it likes, it will look around and try and figure out which court is most advantageous to it,” she said.

“Rather than just saying ‘what is the most appropriate place for us to bring this proceeding in accordance with the standard rules about where you should bring proceedings, we’ll just try and do something that will create a lot of costs and inconvenience for the other side’.

Being an expert in Australian tort law, Davis said the problem could be solved if NZ enacted legislation akin to Australian laws, such as the choice of law rule.

“If [NZ] adopted a similar choice of law rule that would totally nullify any thought of forum shopping so far as torts is concerned,” he said. In the case of contracts, Davis said forum shopping could be avoided through negotiating a selection clause that specifies jurisdiction.

Cooper’s final point was that unlike the Federal Court in Australia, which serves as a common court of appeal, there is no such higher court under the trans-Tasman regime, which would create the risk that different and enforceable interpretations could be made of the same rules.

It was conceivable, although unlikely, Cooper said, that the same contractual dispute could be heard in a court in both Australia and NZ, at the same time. “So you’ve got two courts with the same proceeding running at the same time that both think they have jurisdiction,” she said. “And there is no way of dealing with that under these rules.”

The cases could then move on to “different appeal courts, and you end up with two judgments, both of which are automatically entitled to enforcement in the other country,” she said. “There is no common appeal court, so how do you resolve [these] conflicting judgments.”

Davis said he was “quite sure that the courts in both Australia and New Zealand are well up to the task of deciding if such a matter arose, which is a more appropriate court”.

“It could well be that that problem would be almost entirely eliminated if Australia changed it’s rules about determining a more appropriate forum so as to be much more in line with the New Zealand rules,” he said.

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