No jurisdiction without service: difficulties obtaining interim injunctions against offshore companies
2 Apr 2019
In a short judgment released on 18 February 2019 (Commerce Commission v Viagogo AG ( NZHC 187)), the High Court dismissed an interim injunction against Viagogo AG for lack of jurisdiction. The High Court held that there must first have been service, or substituted service, on Viagogo before it could have jurisdiction to determine the application.
Viagogo is a Swiss company that operates a ticket reselling website in New Zealand. In 2018, by a considerable margin, it was the trader about which the Commerce Commission had received the most complaints. To date, more than 750 customers have complained about Viagogo.
In 2018 the Commerce Commission brought a proceeding under the Fair Trading Act 1986 against Viagogo, alleging that it had made several false and misleading representations on its website. In the substantive proceeding the Commerce Commission sought:
- declarations as to Viagogo's alleged breaches of the Fair Trading Act;
- orders restraining it from continuing to make misleading representations and deceptive statements; and
- orders requiring Viagogo to publish corrective statements.
Interim injunction application
The Commerce Commission also applied without notice for interim orders prohibiting Viagogo from making specific representations about:
- the number of tickets available;
- the likelihood of tickets selling quickly; and
- the validity of the tickets.
Relying on several affidavits from unhappy customers, the Commerce Commission submitted that the evidence clearly demonstrated a serious question to be tried. According to the Commerce Commission:
- the balance of convenience favoured relief because an injunction would not prevent Viagogo from conducting business in New Zealand (it would merely require Viagogo to stop misleading and deceiving customers); and
- the overall justice of the situation favoured injunctive relief because of the vulnerability of customers likely to be misled or deceived by Viagogo's representations.
Viagogo had not been served in accordance with the rules for service. Formal service in Switzerland would take around six months. However, Viagogo had been made aware of the proceedings in December 2018 and its New Zealand counsel had been provided with copies of the documents.
The High Court heard the Commerce Commission's application on 5 February 2019 on a Pickwick basis (a without notice application heard with counsel for the respondent appearing). Viagogo's counsel appeared at the interim injunction hearing, advising that Viagogo would, once served, file an appearance and objection to jurisdiction. Viagogo's counsel further argued that, in the circumstances, the High Court had no jurisdiction to determine the interim injunction application.
The Commerce Commission argued that jurisdiction clearly exists under the Fair Trading Act and that in the absence of any objection to jurisdiction actually being filed by Viagogo, there was no barrier to the High Court determining the interim injunction application.
High Court's ruling
The High Court dismissed the interim injunction application, holding that it did not have jurisdiction to consider and determine the application without service on Viagogo.
In reaching its decision, the High Court considered Discovery Geo Corporation v STP Energy Pte Ltd ( NZHC 3549). In Discovery Geo the plaintiff applied for interim orders restraining a Singaporean company from advancing an application to transfer a petroleum exploration permit. The dispute had already been referred to arbitration, which was to take place in London. Service had not been effected and the matter was heard on an urgent basis, with counsel for the respondent appearing on a Pickwick basis and indicating that jurisdiction would be protested. The High Court dismissed the interim injunction application on the basis that it had no jurisdiction, as jurisdiction is dependent on valid service and there had been no valid service on the defendant.
The Commerce Commission sought to distinguish Discovery Geo on the basis that the High Court's jurisdiction to make the order was more doubtful in that case because the defendant had been an overseas company, the dispute had arisen offshore and the dispute had already been submitted to arbitration in London. In the present case, the conduct had occurred in New Zealand in respect of which the Fair Trading Act specifically confers jurisdiction. Section 3(1) of the Fair Trading Act provides that it:
extends to the engaging in conduct outside New Zealand by any person resident or carrying on business in New Zealand to the extent that such conduct relates to the supply of goods or services… within New Zealand.
The Commerce Commission also argued that Discovery Geo could be distinguished because the defendant, in that case, had not been given sufficient time to file an objection to jurisdiction, which High Court Rule 7.24(1)(b) requires to be filed within three working days of a hearing. In contrast, Viagogo had knowledge of the proceedings for some months, having been advised of them in December 2018 and having taken no steps other than to insist on formal service in Switzerland.
Viagogo argued that Discovery Geo was not distinguishable, noting that the procedural rule which permits the filing of a protest to jurisdiction contemplates a protest only after the defendant has been served. Viagogo also argued that the fact that the Fair Trading Act might confer jurisdiction to grant relief in respect of Viagogo's acts in New Zealand did not, in itself, create the jurisdiction to deal with the application for interim relief at that stage.
The High Court agreed with Viagogo, holding that "[a] party is brought within the jurisdiction of the New Zealand courts by being served". The High Court further held that it is incorrect to say that merely because the conduct complained of is amenable to the jurisdiction of the court that that necessarily brings a defendant, on whom service has not yet been effected, within the High court's jurisdiction. The Commerce Commission's problem was not that an objection to jurisdiction had been filed or intimated, but rather that Viagogo had not been served.
The High Court further noted that there may be circumstances in which genuine urgency precludes service being effected before an application is heard. In such cases, a plaintiff can avail itself of the provisions for substituted service, which the Commerce Commission had not done.
Commerce Commission v Viagogo AG clarifies that the courts will not overlook the requirement for service and highlights the difficulty of seeking an interim injunction against companies that are based overseas.
It is unclear whether the Commerce Commission had considered applying for substituted service. According to High Court Rule 6.8, if reasonable efforts have been made to serve a person with a document by a method permitted or required under the rules, and either the document has come to that person's attention by other means or it cannot be promptly served, the High Court may make orders for substituted service.
In Expotrade Corp v Irie Blue New Zealand ( NZCA 675), the Court of Appeal held that substituted service is, in principle, available in respect of an overseas defendant. The plaintiff would still need to show that the other requirements for valid service have been met (service without leave under Rule 6.27, service with leave under Rule 6.28 and exercise of the court's discretion under Rule 6.29 to assume jurisdiction where service overseas without leave has been effected and jurisdiction is protested). Rule 6.8 is not an alternative means of meeting the requirements of those provisions.
Parties facing difficulties in effecting service on overseas persons should therefore be mindful of the possibility of seeking an order for substituted service.
For further information on this topic please contact Hannah Yiu at Wilson Harle by telephone (+64 9 915 5700) or
email (firstname.lastname@example.org). The Wilson Harle website can be accessed at www.wilsonharle.com.