Commerce Commission v Viagogo AG: Plaintiff granted leave to appeal the High Court decision

Article written by: Nadia Ormiston    |    Friday 26th April 2019

The Commerce Commission has been granted leave to appeal the High Court decision in Commerce Commission v Viagogo AG.[1] This decision declined the Commerce Commission’s (“the Commission”) interim injunction application on the basis that there was no jurisdiction as Viagogo AG had yet to be formally served.

Background

In February, the Commission lost an application for an interim injunction seeking to prevent certain representations being made by Viagogo AG on its website. 

The injunction application was heard on an urgent basis. Viagogo AG appeared via counsel and indicated that once served it would file an appearance and an objection to jurisdiction. Viagogo AG claimed that the High Court had no jurisdiction to determine the injunction application because Viagogo AG had yet to be formally served. Given that Viagogo AG had notice of the application and was represented by counsel, it is not clear why the Commission had not already sought, and did not then seek, orders for substituted service in order to establish jurisdiction.

On 10 April 2019, the Commission applied for leave to appeal the February decision.[2] While the threshold for leave to appeal is high, Jagose J agreed that the Commission had identified an arguable error of law and leave to appeal was granted.

The question for the Court of Appeal will be whether the High Court’s jurisdiction to make interim orders is constrained by any undecided protest to jurisdiction, or by a prerequisite for service.

Is the High Court’s jurisdiction to make interim orders constrained by an undecided protest to jurisdiction, or by a prerequisite for service?

The High Court concluded that it had no jurisdiction to make interim orders in this case. Jagose J, in granting leave to appeal that decision, stated that Courtney J had drawn this conclusion by accepting the Court of Appeal decision in Advanced Cardiovascular Systems[3] (“Advanced”) as authority for the proposition that where a respondent has protested to jurisdiction, the High Court’s jurisdiction to make interim orders is constrained until the question of jurisdiction is resolved. Although Courtney J did refer to this proposition, her decision in fact appears to rely primarily on the lack of service.  

The Advanced decision was on an application for summary judgment. There is some question as to whether its reasoning should be applied to interlocutory applications more generally, but it has been treated as authority to do so.[4] This is arguably at odds with the purpose of interim relief. This is to preserve the position of the parties pending a determination on the merits of the case, not to determine those merits as in a summary judgment.[5] The result is also contrary to the position in England, where the court may grant interim relief pending the resolution of the protest to jurisdiction.[6]

Despite this, Courtney J in the High Court confirmed the application of Advanced and referred to the decision in Discovery Geo Corp v STP Energy Pte Ltd (“Discovery”) where Kós J decided that a mere intention to protest jurisdiction (albeit combined with a lack of formal service) was sufficient to decline an application for interim relief. Courtney J’s finding that the High Court’s jurisdiction to make interim orders is constrained in the circumstances of this case will now be the subject of the Court of Appeal hearing.

Is the Court of Appeal likely to overturn the decision?

In order to overturn the result, the Court of Appeal would need to find that neither the lack of service nor the intended objection to jurisdiction prevent the court granting an interim injunction. Courtney J relied primarily on the lack of service rather than the proposed objection to jurisdiction to decline relief.[7]

Lack of service

There is logical policy support for the view that a lack of formal service should not prevent interim relief being granted. As noted in “Interim relief in support of foreign arbitrations and judicial proceedings":

“There is an air of unreality about permitting a defendant who has notice of the application, and has instructed counsel to act in relation to it under protest, to rely on the absence of formal service to defeat the application irrespective of its merits.”

However, this policy concern can be met without disturbing the well-established law that service establishes jurisdiction. Courtney J has already noted that although Viagogo was not been formally served, issues with service could be dealt with by orders for substituted service.[8]

Where reasonable steps have been taken to effect service, and the documents to be served have come to the knowledge of the person to be served, or cannot be promptly served, the High Court may dispense with leave and allow the proceeding to continue as if service had occurred.[9]  Given that this procedure is already available, the Court of Appeal may see no need to alter the existing law to allow interim relief to be granted before service.

Objections to jurisdiction

The Court of Appeal will have the opportunity to deal with the misgivings of having Discovery generally apply to interim applications. However, if the service issue described above determines the appeal, the Court of Appeal may choose not to address this point.

In Discovery, Kós J left open the possibility that a ‘prima facie jurisdiction’ question exists. In the circumstances of Discovery, it was a real possibility that the protest to jurisdiction would succeed and therefore Kós J did not think it necessary to address the question.  

The grounds on which Viagogo intends to object to jurisdiction are not described in the High Court decisions, but to the extent “prima facie jurisdiction” is relevant, the case seems stronger than that in Discovery. Courtney J agreed with Kós J in Discovery that jurisdiction of New Zealand courts is dependent on valid service. This is not altered by the Fair Trading Act’s express application to conduct outside New Zealand as cited by the Commission. However, the High Court Rules do appear to provide good grounds for Viagogo to be served outside of New Zealand, making them subject to the jurisdiction. If the Court of Appeal accepts that the merits of a proposed objection to jurisdiction are relevant, it is possible that the Commission’s appeal will succeed on this point.

From a policy perspective, a firm rule that a protest to jurisdiction, or the mere prospect of one, deprives the High Court of jurisdiction to grant interim relief would compromise the High Courts’ power to grant such relief against any foreign party. Interim relief applications are generally made before a defendant is required to make any objection to jurisdiction. A tactical objection being made or proposed regardless of its merits could render a defendant “injunction-proof”, at least for a time.

New legislation

In response to the Viagogo case, the Government has now released a discussion paper “Ticket reselling in New Zealand” on which submissions have been invited on several proposals, including:

  • a cap on ticket resale prices (to prevent scalping);
  • the imposition of information disclosure requirements in relation to the resale of tickets (such as disclosing the face value price of tickets being resold), and
  • a prohibition on the use of automated software (bots) used by scalpers to purchase large numbers of tickets for resale

 


 

 

[1] [2019] NZHC 187.

[2] Commerce Commission v Viagogo AG [2019] NZHC 776.

[3] At [2].

[4] Rimini Ltd v Manning Management and Marketing Pty Ltd [2003] 3 NZLR 22 (HC) and Hamilton v Infiniti Capital Andante Ltd HC Auckland CIV-2008-404-2304, 7 May 2008. See “Interim relief in support of foreign arbitrations and judicial proceedings" [2017] NZLJ 134 at 136 for a broader list of applications.

[5] “Interim relief in support of foreign arbitrations and judicial proceedings" [2017] NZLJ 134.

[6] “Interim relief in support of foreign arbitrations and judicial proceedings" [2017] NZLJ 134.

[7] Commerce Commission v Viagogo AG [2019] NZHC 187 at [3] and [13].

[8] Commerce Commission v Viagogo AG [2019] NZHC 187 at [3] and [14].

[9] Rule 6.8(1)(c) High Court Rules

Need more information?

Contact a member of our team:

Contact us

Baldwins' eNewsletter

Sign up to our monthly newsletter