Part I: Introduction

Background

Terms of Reference

Aims of Discussion Paper

Consultation and future steps

Executive Summary

Service and execution of civil process and judgments

Trans-Tasman evidence regime and use of technology

Civil penalties, fines and subpoenas in criminal proceedings

Background

The relationship between Australia and New Zealand was greatly strengthened in 1983 by the Australia New Zealand Closer Economic Relations Trade Agreement (CER). CER has increased co-operation and integration between the two countries and facilitated trans-Tasman trade. Initiatives under CER include the Trans-Tasman Mutual Recognition Arrangement and the work being carried out under the Memorandum of Understanding on Business Law Co-ordination.

CER enjoys strong support from both governments. Recently, as signalled by the two Prime Ministers, the Australian Treasurer and the New Zealand Minister of Finance, the focus has moved towards creating a single economic market. Common regulatory frameworks would underpin this and a work programme covering banking systems, accounting standards, mutual recognition of securities offerings, competition and consumer protection policy is already underway.

Over time, there has been a significant increase in the movement of people, assets and services across the Tasman. At least in part, this is due to CER initiatives.

The significance of the trans-Tasman relationship is clear. For example, more than 815,000 Australians visited New Zealand in 2004. Over one million New Zealanders visited Australia in the same year. In 2004, exports of goods from Australia to New Zealand came to A$8,755m (NZ$9,713m) and from New Zealand to Australia to A$5,193m (NZ$5,760m). In the same year, Australian exports of services to New Zealand came to A$2,597m (NZ$2,881m) and New Zealand exports of services to Australia to A$1,749m (NZ$1,940m). [1] At 31 March 2004, total Australian investment in New Zealand was NZ$51.3 billion (A$44.4 billion) and total New Zealand investment in Australia was NZ$20.8 billion (A$18.0 billion). [2]

In such an environment, there is a greater possibility of disputes with a cross-border element. Closer integration of both countries' civil justice systems could help resolve these. It is also necessary for the success of other CER or single economic market initiatives.

Similarly, each country has a significant interest in promoting the effectiveness of existing regulatory regimes to ensure that limits to the reach of each country's regulatory system are not exploited and that consumers have effective redress.

The early 1990s saw some innovative reforms to the two civil justice systems under the CER umbrella. These include:

  • the trans-Tasman evidence regime that allows subpoenas issued by a court in one country to be served on witnesses in the other, and evidence to be taken from the other country by video link or telephone conference
  • the recognition and enforcement of each other's tax judgments, and
  • the recognition and enforcement of judgments from each other's lower courts.

Apart from this, Australia and New Zealand handle cross-border civil disputes involving the other country in the same way as for any other foreign country. This does not reflect the special relationship between the two countries, which have a shared common law heritage and strikingly similar justice systems. Each country also has confidence in the other's judicial and regulatory institutions. Because of this, many of the safeguards needed with more distant, dissimilar countries are unnecessary.

Further reform to create a more coherent legal framework for resolving civil disputes with a trans-Tasman element would have many benefits, including reduced costs, increased efficiency and reduced forum shopping (where a litigant tries to find the most advantageous jurisdiction in which to bring proceedings). It would build on the success of existing measures and support other current initiatives.

Terms of Reference

In 2003 the Hon John Howard MP and the Rt Hon Helen Clark MP agreed to review existing trans-Tasman co-operation in court proceedings and regulatory enforcement. They also agreed to investigate the possibility of streamlining and improving existing mechanisms, especially in areas such as service of process, taking of evidence, recognition of judgments in civil and regulatory matters and regulatory enforcement. A working group was set up to undertake this review.

The Terms of Reference agreed between Australia and New Zealand require the Working Group to 'examine the effectiveness and appropriateness of current arrangements that relate to civil (including family) proceedings, civil penalty proceedings and criminal proceedings (where those proceedings relate to regulatory matters).

Those arrangements include:

  • investigatory and regulatory powers;
  • service of initiating and other process;
  • taking of evidence; and
  • recognition and enforcement of court orders and judgments (including civil penalties and criminal fines).

The Working Group will:

  • identify any problems that exist with the current arrangements;
  • consider a more general scheme for trans-Tasman service of process, taking of evidence and recognition and enforcement of court orders and judgments;
  • consider a more general scheme for trans-Tasman co-operation between regulators;
  • undertake appropriate domestic consultation; and
  • propose options that may be pursued.'

Aims of Discussion Paper

This discussion paper, prepared by the Working Group:

  • highlights a number of recurring problems in civil court proceedings with a trans-Tasman element and the enforcement of regulatory regimes (such as securities, competition and consumer protection law)
  • discusses options to address these problems and (except for Issue 11) indicates a preferred solution
  • seeks your views.

The discussion paper deals separately with civil issues (Parts II and III) and regulatory/criminal issues related to the enforcement of penal laws (Part IV). Part II is not concerned with criminal penalties, civil penalties or other punitive measures (whether or not pecuniary) sought by, or on behalf of, the State (such as by a regulator). To the extent that proposals are made for cooperation in such matters, they are addressed in Part IV. There are no proposals for inter-regulator cooperation, including the use of investigative powers in the cross-border context, in this paper because these issues have been considered in other projects (see Part IV).

Most recommendations support a single, integrated regime (described in this paper as 'the proposed trans-Tasman regime') modelled on the Service and Execution of Process Act 1992 (Cth) (SEPA). SEPA was devised in Australia to remove many similar problems arising because of Australia's multi-jurisdiction system.

Consultation and future steps

This discussion paper is being widely circulated in Australia and New Zealand among interested parties, including Australian State and Territory governments, the judiciary, key departments and agencies, the legal profession, academics, industry groups and trade bodies.

After considering the comments received, recommendations will be made to both countries' governments.

If both governments accept the recommendations, their agreement could be recorded in a treaty or arrangement. Legislation to give effect to this agreement could then be developed. There would be further consultation on the detailed implementation of the agreement at that stage (including, in the case of Australia, consultation with State and Territory governments).

Executive Summary

The Working Group has identified certain problems with current trans-Tasman arrangements for service of process, taking evidence and enforcing judgments in civil proceedings, civil penalty proceedings and certain criminal regulatory proceedings. The Working Group has also identified some preferred solutions.

Service and execution of civil process and judgments

Issue 1 - Recognition and enforcement of judgments

Australian and New Zealand courts have broad jurisdiction to allow service of proceedings on a defendant overseas. However, if a defendant served overseas does not submit to the court's jurisdiction, the resulting judgment may not be enforceable in the other country. This is undesirable, given the increasing movement of people, assets and services across the Tasman.

The Working Group's proposed solution is to allow initiating process in civil proceedings begun in any Australian State, Territory or Federal Court, or any New Zealand court to be served in the other country without leave. Service would have the same effect as if it had occurred in the place where the proceedings were filed.

The proposed new regime is modelled on the Australian inter-state scheme, the Service and Execution of Process Act 1992 (Cth) (SEPA). Key elements would include the following:

  • The plaintiff would not have to establish any particular connection between the proceedings and the forum to be allowed to serve the proceedings in the other country.
  • The defendant could apply for a stay of proceedings on the basis that a court in the other country is the appropriate court to decide the dispute.
  • A judgment from one country could be registered in the other. It would have the same force and effect, and could be enforced, as a judgment of the court where it is registered.
  • A judgment could only be varied, set aside or appealed in the court of origin. The court of registration would be able to stay enforcement to let this happen.
  • A judgment debtor would be notified if a judgment was registered in the other country.
  • A judgment could only be refused enforcement in the other country on public policy grounds. Other grounds such as breach of natural justice would have to be raised with the original court.
  • The defendant's address for service could be in Australia or New Zealand.
  • Judgments could be registered in the Federal Court of Australia, the Family Court of Australia, any Australian Supreme Court, or the New Zealand High Court, or in any inferior court in either country that could have granted relief.

Issue 2 – Final non-money judgments

Currently only final money judgments can be registered and enforced between Australia and New Zealand. Orders for specific performance or final injunctions are not enforceable in the other country. This makes the effective resolution of disputes more difficult, slower and more expensive.

The Working Group suggests that under the proposed trans-Tasman regime judgments that require someone to do, or not do, something (such as injunctions and orders for specific performance) should also be enforceable. However, some judgments would not be included, such as orders about the administration of estates and the care or welfare of children. Nor would the regime affect other bilateral and multi-lateral arrangements.

Issue 3 – Interim relief in support of foreign proceedings

Currently an Australian or New Zealand court will only grant interim relief, such as a Mareva injunction, pending final judgment in proceedings before that court. Interim relief cannot be obtained in one country in support of proceedings in the other. Instead proceedings seeking resolution of the main dispute need to be commenced in the court where interim relief is sought, even if it is not the appropriate court to decide the matter.

The Working Group suggests that appropriate Australian and New Zealand courts be given statutory authority to grant interim relief in support of proceedings in the other country.

Issue 4 – Enforcing tribunal orders

Decisions of tribunals in one country cannot currently be enforced in the other. However, many tribunals decide disputes in essentially the same way as a court and are widely used. The current situation therefore limits efficient and cost-effective dispute resolution.

The Working Group suggests that certain decisions of specified tribunals be enforceable in the other country. Certain tribunals could also have their proceedings served in the other country under the proposed trans-Tasman regime.

Issue 5 - Forum non conveniens rules

Australia and New Zealand apply potentially inconsistent forum non conveniens, or 'give way', rules to determine whether another court should decide a dispute. The Australian rules require a court to decline jurisdiction only where it is clearly inappropriate for it to determine the dispute. The New Zealand rules require a court to decline jurisdiction where another court is more appropriate. These differences can lead to inconvenience, expense and uncertainty.

The Working Group suggests a common statutory test be adopted by both countries. Proceedings in one country could be stayed if a court in the other country is appropriate to decide the dispute, taking into account a list of factors.

Trans-Tasman evidence regime and use of technology

Issue 6 - Leave requirement for trans-Tasman service of subpoena

Under the trans-Tasman evidence regime in the Evidence and Procedure (New Zealand) Act 1994 (Cth) and the Evidence Amendment Act 1994 (NZ), a subpoena issued in one country can be served on a witness in the other with the leave of a higher court judge. Where a subpoena is issued by a lower court, a separate application must be made to a higher court before service can occur. This adds a layer of cost and complexity and can cause delay.

The Working Group suggests that lower court judges should be able to grant leave to serve a subpoena in proceedings before that lower court or a tribunal. [3]

Issue 7 - Court appearance by video link or telephone

Telephone and video link technology is used under the trans-Tasman evidence regime by witnesses and counsel. Remote appearances by parties and counsel using electronic technology could also reduce the cost and inconvenience of physically attending court in trans-Tasman litigation.

The Working Group suggests that parties seeking a stay of proceedings under the proposed trans-Tasman regime, and their counsel, should be able to appear from the other country as of right. The court would decide the technology to be used. Parties wishing to appear remotely in other situations could do so with the court's leave. Their counsel could also appear with leave, provided they have the right to appear before the court.

Provisions would be needed to give appropriate privileges, immunities and protections to those appearing remotely.

Civil penalties, fines and subpoenas in criminal proceedings

Issue 8 - Enforcing civil pecuniary penalty orders

Civil pecuniary penalty orders imposed by a court in one country are not currently enforceable in the other. This undermines the strong mutual interest each country has in the integrity of trans-Tasman markets and the effective enforcement of each other's regulatory regimes.

The Working Group suggests that all civil pecuniary penalty orders from one country should be enforceable in the other under the proposed trans-Tasman regime. Each country could exclude particular civil pecuniary penalty regimes if it considered this appropriate.

Issue 9 - Enforcing fines for certain regulatory offences

Currently a criminal fine imposed in one country is not enforceable in the other. This is a problem where the fine is imposed under a regulatory regime that impacts on the integrity of markets and in which each country has a strong mutual interest.

The Working Group considers that certain criminal fines should be enforceable in the other country. The regime would apply to fines for offences under a regulatory regime that affects the effectiveness, integrity and efficiency of trans-Tasman markets. This would include fines under the following legislation:

Australia

Trade Practices Act 1974 (Cth)
Corporations Act 2001 (
Cth)
Consumer protection and product safety legislation at State and Territory level
Occupational regulation legislation at State and Territory level

New Zealand

Commerce Act 1986
Companies Act 1993
Fair Trading Act 1986
Securities Act 1978
Securities Markets Act 1988
Takeovers Act 1993
Financial Reporting Act 1993
Credit Contracts and Consumer Finance Act 2003
Occupational regulation legislation

Such fines would be enforceable in the other country in the same way as a civil judgment debt. This should address potential concerns about one country using its fine collection powers to enforce the other's criminal sanctions.

A public policy exception to enforcement would apply. Also, criminal fines could only be registered for enforcement in a higher court.

To address concerns that the proposal would result in activities in one country being regulated in the other, there would need to be a real and substantial connection between the country imposing the fine and the conduct amounting to the offence. This could be done by specifying the circumstances under which a fine under a particular regime would be enforceable in the other country.

Issue 10 - Extending trans-Tasman subpoenas to criminal proceedings

A subpoena under the trans-Tasman evidence regime cannot be issued in criminal proceedings. If a witness is unwilling, evidence can only be obtained under less convenient procedures, such as the Mutual Assistance in Criminal Matters legislation.

The Working Group supports extending the trans-Tasman subpoenas regime to criminal proceedings. Various safeguards (such as the leave requirement) would prevent misuse.

Issue 11 - Regulator co-operation

The Working Group invites your comment on whether regulatory contexts, other than securities and competition and consumer protection, would benefit from further trans-Tasman co-operation and what form it should take.


Footnotes

1 Exchange rate applied for calendar year 2004: A$1 = NZ$1.1093.

2 Exchange rate applied for 31 March 2004: A$1 = NZ$1.1560.

3 In this paper, 'judge', in relation to Australia, includes a magistrate, for example, where the Federal Magistrates Court of Australia has jurisdiction over the matter.