Gordhan v Kerdemelidis [2013] NZHC 566 (21 March 2013)

Last Updated: 28 March 2013

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2010-409-002982 [2013] NZHC 566

BETWEEN MUKESH GORDHAN Plaintiff

AND SAVVA KERDEMELIDIS Defendant

Hearing: 25 and 26 February 2013

Appearances: B D Gustafson and K D Puddle for Plaintiff

G H Nation and M K Prendergast for Defendant

Judgment: 21 March 2013

_{JUDGMENT OF CHISHOLM J}

A Judgment for the defendant.

_{B Costs to be resolved in terms of [100].}

_REASONS

Introduction

[1] On 23 August 2010 the plaintiff obtained a joint and several default judgment for US$4,012,260.47 plus interest (the foreign judgment) against the defendant and others in the Eighth Judicial District Court for Clark County, Nevada, USA (the State Court). The defendant resides in New Zealand and has never resided in Nevada.

_{The New Zealand Reciprocal Enforcement of Judgments Act 1934 does not apply.}

GORDHAN V KERDEMELIDIS HC CHCH CIV-2010-409-002982 [21 March 2013]

[2] The plaintiff has issued this proceeding for the purpose of enforcing the foreign judgment against the defendant at common law. He seeks judgment against the defendant in the sum of US$4,082.667.89 which represents the foreign judgment plus interest to the date of filing. He also seeks interest from that time.

[3] The defendant opposes the claim on two grounds:

(a) He did not voluntarily submit to the jurisdiction of the State Court which accordingly had no jurisdiction over him;

(b) The foreign judgment was obtained by fraud.

Associate Judge Matthews directed that these two issues were to be split, with the jurisdiction issue to be determined first.1

[4] This judgment concerns the jurisdiction issue. If the defendant succeeds he will be entitled to judgment. On the other hand, if the plaintiff succeeds the ultimate outcome will depend on whether the foreign judgment was obtained by fraud.

Background

[5] The plaintiff was employed as chief operating officer2 by Compudigm International Limited (Compudigm), a New Zealand registered company. At all relevant times this company operated in Nevada and the plaintiff was based in that state, having relocated there to oversee the company’s operations.

[6] In May 2007 the plaintiff was suspended by the company pending an investigation into his conduct. Attempts to resolve the matter having failed, he issued proceedings against Compudigm in the State Court on 13 August 2007. These proceedings alleged, amongst other things, that the company had breached his

_{employment agreement.}

1 _{Gordhan v Kerdemelidis HC Christchurch CIV-2010-409-002982, 6 August 2012.}

2 And later also as chief financial officer.

[7] Ultimately the plaintiff was informed in a letter dated 11 December 2007 that his employment had been terminated for serious misconduct on the following grounds:

1. Attempting to gain personal advantage by conspiring with Mr Andrew Cardno3 to sign new employment contracts between yourselves without the appropriate delegated authority and Board knowledge; and

2. Knowingly authorising irregularities in Compudigm’s trade financing activities with ANZ bank and Silicon Valley Bank. We reserve our right to refer this matter to the appropriate authorities.

Those allegations were (and are) strongly denied by the plaintiff. The letter was signed by the defendant in his capacity as in-house legal counsel/company secretary of the company.

[8] The company was placed in receivership on 31 March 2008, and later went into liquidation.

[9] With leave of the State Court the plaintiff then amended his pleading by adding the defendant and three other individuals as defendants.4 All these individuals were associated with the company. The amended pleading alleged that these defendants had made false and defamatory statements about the plaintiff to third parties, intentionally interfered with his employment agreements, and participated in a civil conspiracy against him.

[10] Although the plaintiff purported to effect service of the amended pleading on the defendant in New Zealand, there were issues about the method of service. Following exchanges between the legal advisors for the parties it was agreed that the defendant would have until 13 June 2008 to file and serve his response to the claim on the basis that he would not challenge the mode of service.

[11] The defendant did not, however, file or serve any response in the State Court by the specified date or, indeed, at any later time. Instead, on the advice of their

3 _{The chief executive officer of Compudigm.}

4 Two of those individuals reside in Australia and the third in Canada. Another company was also named as a defendant but the claim against that company was never pursued.

United States attorney, the defendant’s three co-defendants, with his consent, filed a notice of removal on 19 June 2008. This sought removal of the proceeding from the State Court to the United States District Court, District of Nevada (the Federal Court).5 The notice recorded that jurisdiction over the defendants was not admitted.

[12] Accompanying the notice of removal was a notice of appearance recording the identity of the attorneys acting for the defendants, including Mr Kerdemelidis. Another document, a certificate of interested parties, certified that there were no other interested parties.6

[13] A few days later, on 26 June 2008, the defendants (including Mr Kerdemelidis) filed a motion to dismiss in the Federal Court. This motion sought dismissal of the plaintiff’s proceeding on the grounds that the Federal Court lacked personal jurisdiction over the defendants, or, alternatively, under the doctrine of forum non conveniens. This doctrine provides that a Court may stay an action if the defendant satisfies the Court that some other forum is more appropriate.

[14] The plaintiff responded by filing a motion to remand the proceeding from the Federal Court back to the State Court. That application was opposed by the defendants. The Federal Court decided that the plaintiff’s motion to remand the proceeding back to the State Court should be heard before the defendant’s motion for dismissal.

[15] On 27 January 2009 a Federal Court Judge remanded the matter back to the State Court on the basis that there had been a “fatal procedural defect” in the removal to the Federal Court, namely, lack of consent of all the defendants. This reflected that the receivers of Compudigm, one of the defendants, had not consented to the removal. (By this time judgment had been entered against that company in the State Court.) The defendants were ordered to pay costs and those costs were ultimately paid by one of the defendant’s co-defendants.

_{[16] The proceeding was now back in the State Court.}

5 It is not clear why the defendant consented rather than joining the other three defendants, but that is not a matter of moment.

6 This document enabled Judges of the Federal Court to evaluate possible disqualification or recusal.

[17] On 6 March 2009 the defendants filed a motion to dismiss in the State Court which broadly followed the format of the motion that had earlier been brought in the Federal Court.7 Again, lack of personal jurisdiction over the defendants or, alternatively, forum non conveniens, was relied on.

[18] The motion to dismiss, which was opposed by the plaintiff, was heard by the State Court on 30 April 2009. In a decision delivered on 12 March 2010 the Judge found that the State Court had jurisdiction and denied the defendant’s motion for dismissal. The defendants took no further part in the proceeding and their attorneys obtained leave to withdraw.

[19] Following an uncontested hearing in the State Court default judgment was delivered on 13 July 2010. Because of an arithmetical error the total amount for which judgment was given was later amended to $4,012,260.47 plus interest. That judgment remains unsatisfied.

[20] This proceeding was issued on 23 December 2010. Although the plaintiff initially sought summary judgment, that application was ultimately abandoned. Strike out applications by both parties were determined by Associate Judge Osborne on 20 December 2011.8

The competing cases

[21] The sole issue is whether the defendant voluntarily submitted to the jurisdiction of the State Court. While there is broad agreement between the parties about the steps that led to the foreign judgment, they strongly disagree about the implications in the present context.

Plaintiff ’s case

[22] Under its own law the State Court had jurisdiction and the plaintiff was justified in pursuing his claim in that Court. It was the defendant’s actions within

7 _{See above at [13].}

8 Gordhan v Kerdemelidis HC Christchurch CIV-2010-409-002982, 20 December 2011.

Nevada that gave rise to the causes of action against the defendant, and this is not a case of a plaintiff arbitrarily selecting a foreign Court.

[23] Five steps taken by the defendant in Nevada amounted to a submission to jurisdiction in terms of New Zealand law:

5.1 Making an application for forum non conveniens in the State Court;

5.2 Seeking to argue the merits of the case in a motion to dismiss for lack of personal jurisdiction;

5.3 Consenting to the removal of the proceedings to the Federal Court without reservation as to the jurisdiction of the State Court;

5.4 Filing of the appearance in the Federal Court; and

5.5 The defendants paying the costs for the remand ordered by the

Federal Court.

On the balance of probabilities all of these steps are sufficient, either singly or collectively, to constitute a voluntary submission to the State Court.

[24] By advancing the forum non conveniens ground the defendant was effectively asking the Court to exercise a discretion. Moreover, by advancing that ground he implicitly recognised that the State Court had jurisdiction over him.

[25] These five steps took place in the context of hard fought commercial litigation, with many hundreds of Court documents being filed over a two year period. Throughout the defendant, who had earlier practised in New Zealand as a solicitor, was represented by counsel. This was not a situation involving an accidental submission to a foreign jurisdiction.

[26] It follows that the defendant is bound by the steps he took in the foreign proceedings. They amounted to a voluntary submission to the jurisdiction. Had any of his applications succeeded the defendant would have gladly taken advantage of the victory. Just as he would have considered himself bound by any success, he must now be bound by his failure.

[27] The plaintiff was the only witness. He gave evidence about events that led to him issuing the proceeding in the State Court, and about the steps that both he and the defendant took thereafter.

Defendant’s case

[28] The foreign judgment was obtained by default on the basis that the defendant had not taken any steps to defend the proceedings, or any other steps that required him to be heard when judgment was given. In other words, the State Court dealt with him on the basis that he had not participated in the proceeding.

[29] It was never his intention to submit to the jurisdiction of the State Court and he instructed his United States attorney accordingly. Each step was taken in accordance with legal advice for the purpose of contesting the jurisdiction of the Nevada Courts.

[30] None of the steps relied on by the plaintiff amounted to a submission to the jurisdiction of the Nevada Court. In particular:

(a) The application for dismissal on the grounds of forum non conveniens was part and parcel of the protest to jurisdiction. It did not involve the merits of the substantive claim.

(b) He consented to the removal of the proceedings into the Federal Court to enable him (and the other defendants) to better argue his protest as to jurisdiction. In any event the notice of removal expressly reserved the objection to jurisdiction.

(c) The notice of appearance in the Federal Court needs to be read in conjunction with the notice of removal which recorded that jurisdiction was not admitted. It did not involve a waiver of the protest or an acceptance that the Court would be able to deal with the merits of the case.

(d) The costs were not paid by him and there is no suggestion that he contributed to those costs. The fact that the costs were paid only indicates that someone did not want to be subject to any order of the Federal Court that might have implications if they were ever within the jurisdiction of that Court.

Given that the matter was referred back to the State Court by the Federal Court, all the steps in the Federal Court should be ignored.

[31] The defendant gave evidence to the effect that he (and his co-defendants other than Compudigm) did not want to do anything that might constitute a submission to the jurisdiction of the Nevada Court. All the steps taken by him were for the purpose of objecting to the Court’s jurisdiction, and on the basis of legal advice. Jared Sechrist, the defendant’s United States attorney, gave evidence by video link confirming that each step was taken on his advice for the purpose of contesting jurisdiction.

[32] Joshua Reisman, an attorney with considerable experience in commercial litigation in both the State and Federal Courts of Nevada, gave expert evidence by video link. His evidence was to the effect that in terms of the federal and state law applying in Nevada the steps taken by the defendant did not constitute a waiver of the defendant’s objection to the jurisdiction of those Courts.

Legal principles

[33] To a large extent the competing cases reflect a different interpretation of the law that needs to be applied.

Plaintiff ’s interpretation

[34] Personal jurisdiction of the State and Federal Courts over the defendant arose because he voluntarily appeared in the proceedings. This reflects that a voluntary appearance is one which goes beyond simply contesting jurisdiction: Von Wyl v

Engeler.9 The defendant could have simply taken no steps, but he chose to appear, and in so doing submitted to the jurisdiction.

[35] By asking the Nevada Courts not to accept jurisdiction on the basis of forum non conveniens, the defendant was asking those courts not to assume jurisdiction that they already possessed. It follows that he was submitting to the jurisdiction of those Courts: Harris v Taylor;10 Henry v Geoprosco International Limited;11 and Kuwait Asia Bank EC v National Mutual Life Nominees Limited.12 As Mr Gustafson put it, the defendant “could not have his cake and eat it as well”.

[36] A submission involving the substantive merits of the case also amounts to a submission to that jurisdiction: Boyle v Sacker.13 The defendant made submissions as to the merits of the claim which had nothing to do with protesting the jurisdiction, e.g. referring to the employment history giving rise to the proceedings.

[37] To the extent that the evidence before the Court on behalf of the defendant concerns whether the defendant subjectively intended to submit to the jurisdiction of the Nevada Courts, it should be disregarded. The subjective intention of the defendant is irrelevant. A submission is voluntary unless it arises from some form of compulsion, e.g. where assets have been seized within the foreign jurisdiction.

Defendant’s interpretation

[38] The law and principles to be applied are in Von Wyl. An appearance solely for the purpose of protesting jurisdiction will not constitute a submission to that jurisdiction. That was the defendant’s purpose and he was careful to ensure that he did not submit to the Nevada jurisdiction.

[39] This Court is not bound by the English decisions relied on by the plaintiff, and they should not be followed. Harris, which was followed by Henry, has been

9 _{Von Wyl v Engeler (1998) 12 PRNZ 187 (CA) at 191 - 192.}

10 _{Harris v Taylor [1915] 2 KB 580 (CA).}

11 _{Henry v Geoprosco International Limited [1976] 1 QB 726 (CA).}

12 _{Kuwait Asia Bank EC v National Mutual Life Nominees Limited (1990) 2 PRNZ 291 (PC).}

13 Boyle v Sacker (1888) 39 Ch.D 249 at 252.

much criticised, for example in Re Dulles’ Settlement (No. 2) Dulles v Vidler.14 The leading English authority is now the House of Lords’ decision in Williams & Glyn’s Bank PLC v Astro Dinamico Compania Naviera SA.15

[40] Alternatively, any submission by the defendant to the Nevada jurisdiction would have to have been voluntary: Von Wyl. Thus the subjective intent of the defendant as disclosed by the evidence is important: Redhead v Redhead16 and

Adams v Cape Industries PLC.17 The evidence establishes that the defendant did not

intend to submit to the jurisdiction of the Nevada Courts.

The New Zealand cases

[41] Obviously Von Wyl is the leading New Zealand authority. In that case the Court of Appeal upheld the decision of this Court dismissing a claim seeking to enforce a Swiss Court judgment against a New Zealand defendant. The issue was whether the defendant had submitted to the jurisdiction of the Swiss Court.

[42] The defendant was unaware that proceedings had been issued in the Swiss Court until he received a letter on behalf of the Swiss Court requesting that he designate an agent in Switzerland to accept service. The defendant replied that he did not have anyone that he could designate and “thus I have to designate the [Swiss] District Court”. Further on the letter described that designation as a “proposal” and explained that he had “nothing else to suggest”. The Swiss Court did not accept the proposal and the matter proceeded to default judgment without further involvement by the defendant.

[43] When discussing the principle underlying the concept of a voluntary submission to a foreign jurisdiction the Court explained18:

...a person who would not otherwise be subject to the jurisdiction of the Court may preclude himself or herself by his or her own conduct from objecting to the jurisdiction and thus giving the Court an authority over that

14 _{Re Dulles’ Settlement (No. 2) (Alt. Cit Dulles v Vidler) [1951] 1 Ch 842 (CA) at 848-849, 851.}

15 _{Williams & Glyn's Bank PLC v Astro Dinamico Compania Naviera SA [1984] 1 WLR 438 (HL).}

16 _{Redhead v Redhead [1926] NZLR 131 (SC).}

17 _{Adams v Cape Industries PLC [1990] 1 Ch 433 (CA).}

18 With reference to the rules in Dicey & Morris, The Conflict of Laws (12th ed).

person which, but for that submission, it would not possess (p 310). Accordingly, the onus is on the party seeking to enforce the foreign judgment to establish that the non-resident accepted the jurisdiction of the foreign Court to determine the proceeding. It follows that a person who appears merely to contest the jurisdiction of the Court does not thereby submit (p 311):

“In order to establish that the defendant has, by his own conduct in the proceedings, submitted or waived his objection to the jurisdiction, it must be shown that he has taken some step which is only necessary or only useful if the objection has been waived or never been entertained at all.”

The crucial question, then, is whether the absent defendant is shown to have conferred jurisdiction on the foreign Court by submitting to it or agreeing to submit to it.19

It was held that an alleged submission to the jurisdiction in the form of instructing or authorising someone to accept service on behalf of the defendant required proof that the proposed agent was both willing to accept service as agent and actually did so without qualification. That had not happened, and there had been no submission to the Swiss jurisdiction.

[44] Several features of Von Wyl are worth recording: an appearance simply for the purpose of contesting jurisdiction does not amount to a submission to that jurisdiction; the test is whether the step would only be necessary or useful if the objection had been waived or never entertained at all; and when examining those issues the Court will take into account the circumstances surrounding the particular step and apply a realistic judgment as to whether the step amounted to a submission

to the jurisdiction.20 While that decision did not specifically involve the doctrine of

forum non conveniens, I do not see any reason why the approach adopted by the

Court should not also apply in that situation.

[45] The decision of the Privy Council in Kuwait Asia Bank was relied on by Mr Gustafson to support the rigid proposition that forum non conveniens involves an exercise of discretion and is thereby not a protest to jurisdiction. That case arose from an application to this Court under (then) r 133 of the High Court Rules by a defendant who had been served outside New Zealand.

[46] During the course of their judgment Their Lordships commented that they:

...consider that...forum conveniens (like every other discretionary objection) can be raised on a r 131 application, but also think that it is for the Courts of New Zealand to follow their own preferred procedure in this respect.21

There was also an earlier comment to the effect that the question of forum conveniens did not raise the issue of jurisdiction.22

[47] At first sight those observations strongly support the plaintiff’s proposition. However, it is clear from the Court of Appeal judgment (the relevant part of which is quoted by the Privy Council at 297) that the question of forum conveniens did not arise in that case. Thus the Privy Council’s observations are obiter. Moreover, it is difficult to reconcile them with the approach signalled by the Court of Appeal in

Von Wyl (or by the House of Lords in Williams & Glyn’s Bank).23

[48] Several other New Zealand cases justify brief mention.

[49] In Redhead McGregor J held that an appearance entered in England in error and without the authority of the co-respondent who resided in New Zealand did not constitute a voluntary submission to jurisdiction. In my view that decision is completely in line with Von Wyl.

[50] The issue in Equiticorp Industries Group Ltd v Hawkins24 was whether the off-shore defendant had submitted to the jurisdiction of the New Zealand Courts by applying for an order for security for costs (and incidental orders for a stay and costs) and then, about six weeks later, applying for an order for the production of documents. The application for security had been filed and served simultaneously with a notice of appearance under protest to jurisdiction.

[51] Wylie J was strongly influenced by two English cases which I will discuss in a moment: Williams & Glyn’s Bank and Re Dulles’ Settlement Trusts. He looked at

_{the substance of what had happened and the underlying purpose. He concluded that}

21 _{Kuwait Asia Bank EC v National Mutual Life Nominees Limited, above n 12 at 304.}

22 _{At 297.}

23 _{See [66] – [70] below.}

24 Equiticorp Industries Group Ltd v Hawkins [1991] 3 NZLR 700 (HC).

the seeking of an order for costs in anticipation of the protest being set aside was not a waiver of the protest or a submission to the jurisdiction. Wylie J also held that the consequential application for production of documents did not alter that situation.

[52] More recently in Pickett v Pulman25 Associate Judge Lang (as he then was) considered whether steps taken by the defendant in a United States Court constituted a voluntary submission to the jurisdiction of that Court, and thereby entitled the plaintiff to summary judgment against the defendant in New Zealand. That case was somewhat unusual in that the steps taken by the defendant in the United States Court were taken after default judgment had been entered.

[53] Following entry of the default judgment the defendant filed a motion in the

United States Court seeking orders:

(a) Vacating the default judgment and granting leave to file and serve an answer.

(b) Dismissing him from litigation on the ground that the United States

Court had no jurisdiction over him.

(c) Dismissing the complaint on the ground of forum non conveniens.

[54] After reviewing the relevant authorities the Judge concluded that rather than constituting a protest to the jurisdiction of the United States, the defendant was actually seeking to defend the proceeding and this went beyond merely protesting jurisdiction. Given the steps the defendant had taken, that outcome was scarcely surprising. It is also significant that in that case the Judge was not prepared to take the defendant’s contention that he only appeared in a United States Court to protest against its jurisdiction at face value: he considered that such contention had to be

“measured against the evidence”.26

[55] Another case involving an application for summary judgment to enforce a foreign judgment is Pawson v Claridge.27 The issue was whether the defendant’s motion seeking an extension of time within which to answer the complaint amounted to a submission to the overseas jurisdiction.

[56] While concluding that the motion itself “raised a clear inference that it was not intended to be a submission to jurisdiction”,28 the Judge noted that the motion for an extension of time had not specifically reserved the defendant’s objection to jurisdiction. Given that the law in this area was “complex and uncertain”29 and the Judge had not had the benefit of full argument, she decided against determining whether there had been a submission to the jurisdiction of the United States Court. Instead she determined the application for summary judgment on other grounds.

[57] Finally, in Clements v Thurlow30 Associate Judge Bell considered whether an off-shore defendant’s objection to jurisdiction had come too late because he had already submitted to the jurisdiction. After briefly traversing the legal principles31 the Associate Judge allowed the defendant to file and serve an appearance objecting to the jurisdiction on the basis that all documents directed at the merits were withdrawn.

[58] This decision reflects a relatively pragmatic approach. Beyond that I doubt that it assists one way or other.

The English cases

[59] In Harris, which is relied on by the plaintiff, the issue was whether the defendant had submitted to the jurisdiction of the Isle of Man Court by appearing “conditionally” to set aside the order for service of the proceeding on the basis that he was outside the jurisdiction. The English Court of Appeal held that he had

_{submitted to the Isle of Man jurisdiction.}

27 _{Pawson v Claridge HC Auckland CIV-2009-404-4367, 25 June 2010.}

28 _{At [43].}

29 _{At [48].}

30 Clements v Thurlow [2012] NZHC 2449.

[60] Buckley LJ reasoned:32

When the defendant was served with the process he had the alternative of doing nothing...But the defendant was not content to do nothing; he did something which he was not obliged to do, but which, I take it, he thought it was in his interest to do. He went to the Court and contended that the Court had no jurisdiction over him.

The other members of the Court agreed, with Bankes LJ commenting33 that the fact that the defendant has sought the protection of the Court imposed upon the defendant an obligation to obey the judgment of the Court if it should happen to go against him.

[61] A contrary view was taken by the Court of Appeal in Re Dulles’ Settlement

Trust. Denning LJ said:34

I cannot see how anyone can fairly say that a man has voluntarily submitted to the jurisdiction of a court, when he has all the time been vigorously protesting that it has no jurisdiction. If he does nothing and lets judgment go against him in default of appearance, he clearly does not submit to the jurisdiction. What difference in principle does it make, if he does not merely do nothing, but actually goes to the court and protests that it has no jurisdiction? I can see no distinction at all.

Supporting that view the other member of the Court, Evershed MR, predicted that the correctness of Harris may fall at some time to be considered in the House of Lords. It turned out that he was right: see [70] – [72] below.

[62] Endorsing the Re Dulles’ Settlement approach, the editors of Dicey & Morris, The Conflict of Laws35 described the contrary proposition as “revolting to commonsense”. But there was no consensus, one way or the other, in the cases that followed until the issue came before the Court of Appeal again in Henry, which the plaintiff also relies on.

[63] The issue in Henry was whether a judgment obtained in Canada could be enforced against the defendants in England. The steps taken by the defendants in the

_{Canadian Court were:}

32 _{Harris v Taylor, above n 10, at 587.}

33 _{At 592.}

34 Re Dulles’ Settlement, above n 14 at 850.

(a) Seeking an order setting aside service of the statement of claim on three grounds, including a ground that the Canadian Court was not the forum conveniens;

(b) Alternatively, seeking a stay of the proceeding on the basis of an arbitration clause;

(c) Appealing against the decision of the Canadian Court declining to set aside the statement of claim or grant a stay.

The Court of Appeal decided that the defendants had voluntarily submitted to the jurisdiction of the Canadian Court.

[64] Significantly counsel for the defendants had conceded in the Court of Appeal that, given the terms of the notice of motion and the notice of appeal, he could not argue that the respondents had done no more than protest against the jurisdiction of the Canadian Court. This led the Court of Appeal to record that it was not deciding that an appearance solely to protest against the jurisdiction is, without more, a voluntary submission.36

[65] Instead, the Court proceeded on the basis that the defendants had voluntarily asked the Canadian Court to adjudicate on the merits of its defence and, having lost, they were bound by the result. Thus the application for a stay was a voluntary submission. On the facts that conclusion was not surprising.

[66] The Court also decided, obiter, that the application to set aside the order for service on the grounds of forum non conveniens involved a discretion not to exercise the “undoubted jurisdiction”37 that it possessed and that in that respect the case was indistinguishable in principle from Harris. It is this part of the judgment that the plaintiff places particular reliance on.

[67] The uncertainty in the English Law was resolved by the Civil Jurisdiction and

_{Judgments Act 1982 (UK). Section 33 of that Act provides:}

36 _{Henry v Geoprosco International Limited, above n 10 at 748.}

37 At 750.

33 (1) For the purposes of determining whether a judgment given by a Court of an overseas country should be recognised or enforced in England and Wales or Northern Ireland, the persona against whom the judgment was given shall not be regarded as having submitted to the jurisdiction of the Court by reason only of the fact that he appeared (conditionally or otherwise) in the proceedings for all or any one or more of the following purposes, namely –

(a) to contest the jurisdiction of the court;

(b) to ask the court to dismiss or stay the proceedings on the ground that the dispute in question should be submitted to arbitration or to the determination of the courts of another country;

(c) to protect, or obtain the release of, property seized or threatened with seizure in the proceedings.

...

Similar legislation has been passed in Australia (the Foreign Judgments Act 1991 (Cth)).

[68] There is no similar legislation in New Zealand. Mr Gustafson submitted that

the defendant’s position:

...that the Court of Appeal in Von Wyl v Engeler somehow adopted the United Kingdom’s position, statute and all, through its approval of academic commentary, cannot be sustained. Von Wyl did not concern forum non conveniens. There was therefore no argument on point. There was no discussion of the United Kingdom statute. Nor is it a sound principle in law that the New Zealand Court of Appeal can make policy driven changes in the law, including the adoption of foreign statutes, through the approval of foreign academic commentary.

I disagree. Given that the claim before the New Zealand Court of Appeal turned on whether a foreign judgment could be enforced in New Zealand at common law, I fail to see why the Court of Appeal could not develop the relevant law as it saw appropriate. In any event, I am bound by the Court of Appeal.

[69] Another factor also undermines the plaintiff’s reasoning. Like our Court of Appeal, in Williams & Glyn’s Bank the House of Lords arrived at a result that closely resembles the Civil Jurisdiction and Judgments Act 1982 (UK). Although that decision appears to have been delivered after that Act came into force, events giving rise to the decision had occurred prior to the Act, and the Act did not apply.

[70] In Williams & Glyn’s Bank a bank sought to enforce its securities against the defendants by instituting proceedings in England in reliance on their personal guarantees. The defendants then commenced proceedings in a Greek Court seeking, inter alia, declarations that the documents relied on by the bank were void. They also sought to have the plaintiff’s action in England set aside or stayed until the proceedings could be determined in Greece. It was contended by the plaintiff, first, that by applying for a stay the defendant’s had waived any objection to the jurisdiction of the English Court and, secondly, that they would also waive any objection if they persisted with their application in priority to disputing jurisdiction.

[71] The House of Lords disagreed. Lord Fraser, delivering the lead judgment, stated:38

It would surely be quite unrealistic to say that the respondents had waived their objection to the jurisdiction by applying for a stay as an alternative in the very summons in which they applied for an order giving effect to their objection to the jurisdiction. That summons makes it abundantly clear that they are objecting, and the fact that they asked for a decision upon their objection to be postponed until the outcome of the Greek proceedings is known is not in any way inconsistent with maintaining their objection. I can see no reason in principle or in commonsense why the respondents should not be entitled to say: “We object to the jurisdiction of the English courts, but we ask for the proceedings necessary to decide that and the other issues to be stayed pending the decision of the proceedings in Greece.”

Adopting the approach utilised by Cave J in Rein v Stein39 the Court proceeded on the basis that in order to establish a waiver it is necessary to show that the party alleged to have waived his objection “has taken some step which is only necessary or only useful if the objection has been actually waived, or if the objection has never been entertained at all”.

[72] Their Lordships also commented that the statement of Denning LJ in Re

Dulles’ Settlement quoted at [59] seemed very apposite in the present case “where

_{the respondents have from the beginning been vigorously protesting that the English}

38 _{Williams & Glyn’s Bank PLC v Astro Dinamico Compania Naviera SA, above n 15, at 442.}

39 Rein v Stein (1892) 66 LT 469 at 471.

Courts have no jurisdiction over them”.40 They also concluded that the application

for a stay was “in no way inconsistent with that protest”.41

[73] I find Williams & Glyn’s Bank significant for several reasons. First, it decisively resolved the conflict between the English Court of Appeal decisions in favour of the Dulles’ Settlement approach. Secondly, in doing so it adopted what might be described as a “common sense” rather than a technical approach. And, thirdly, at least to the extent that the Rein v Stein approach underpins both decisions, the House of Lords and New Zealand Court of Appeal have effectively applied the same test.

Conclusions as to the principles to be applied

[74] On my analysis of those decisions the following principles need to be applied in this case:

(a) The onus rests on the plaintiff to establish that the defendant voluntarily submitted, or agreed to submit, to the jurisdiction of the State Court: Von Wyl.42

(b) Whether there has been a submission is to be determined by reference to the New Zealand rules of conflict of laws rather than the foreign Court’s own law: Von Wyl.43

(c) A person who appears merely to contest the jurisdiction of the Court does not thereby submit to that jurisdiction. It must be shown that person has taken some step which is only necessary or useful if the objection has been waived or never been entertained at all: Von Wyl.44

(d) When determining the significance or otherwise of an individual step taken by a defendant the Court needs to realistically consider that step

40 _{Williams & Glyn’s Bank PLC v Astro Dinamico Compania Naviera SA, above n 15 at 444.}

41 _{At 444.}

42 _{Von Wyl v Engeler above n 9 at 191.}

43 _{At 191.}

44 At 192.

within the overall context: Williams & Glyn’s Bank.45 Thus, a defendant objecting to the jurisdiction can seek other orders provided they do not give rise to a waiver of the protest to jurisdiction: Equiticorp Industries.46

(e) There is no principle that a defendant who relies on the ground of forum non conveniens and loses, has thereby submitted to the jurisdiction: Williams & Glyn’s Bank.47 Whether that is the case will depend on the facts of the particular case and, in particular, whether the foreign Court is being asked to adjudicate the substantive merits.

(f) A voluntary submission to the jurisdiction can arise even thought the defendant did not subjectively intend that outcome. It is for the Court to objectively assess whether the steps taken by the defendant produced that result: Pickett.48 I decline to apply the observation of Scott J in Adams that a voluntary submission or an agreement to submit is based on consent, and actual consent is, in principle, necessary.49

(g) Evidence from an expert about the foreign law may be helpful in assisting the Court to determine the significance or otherwise of steps taken by the defendant.

Was there a voluntary submission in this case?

[75] I do not accept the defendant’s proposition that because the matter was returned to the State Court the steps taken in the Federal Court can be ignored. The evidence indicates that the electronic file of the proceedings transferred back to the State Court from the Federal Court would have included all documents filed in both

_courts.

45 _{Williams & Glyn’s Bank PLC v Astro Dinamico Compania Naviera SA, above n 15 at 443.}

46 _{Equiticorp Industries Group Ltd v Hawkins above n 24at 717.}

47 _{Williams & Glyn’s Bank PLC v Astro Dinamico Compania Naviera SA above n 15 at 442.}

48 _{Pickett v Pulman above n 25at [31].}

49 Adams v Cape Industries PLC above n 17 at 458.

[76] For the purpose of considering the individual steps relied on by the plaintiff I find it convenient to take them in chronological order, rather than the order in which they were argued by counsel.

Consenting to removal to the Federal Court without protesting jurisdiction

[77] The evidence before the Court includes a series of emails between

Mr Sechrist and the defendants. On 18 June 2008 Mr Sechrist advised:

We believe this case may be removable to federal court, which would be advantageous to us and will buy us more time to prepare our jurisdictional motions. We recommend this course of action. [Emphasis added.]

Thus it appears that the objective of protesting jurisdiction existed from the outset.

[78] This is followed by a further email from Mr Sechrist indicating that he recommended removal to the Federal Court for defendants whenever possible, because that Court had a more favourable jury pool, a more learned and defence- orientated judiciary, and was more likely to grant subsequent “dispositive” motions.

[79] Later that day Mr Wamsteker (one of the defendant’s co-defendants) sent an email to Mr Sechrist, with a copy to the defendant, asking whether filing for removal would “take away our right to claim lack of jurisdiction of the Nevada Court over the various co-defendants”. Mr Sechrist confirmed that “Removing does not take away our jurisdictional arguments”. Mr Sechrist was then instructed to proceed.

[80] According to the plaintiff the defendant’s application to transfer the proceeding to the Federal Court was nothing more than a mechanism to buy time and avoid a default judgment. This reflected that under the rules of the State Court a motion to dismiss had to be brought within 20 working days after service and that time had expired by the time the motion for removal was filed on 19 June 2008. The plaintiff also claims that the application for removal was filed without protest as to the jurisdiction of the State Court, and was also doomed to failure because the receivers of Compudigm did not consent, which was an essential prerequisite to removal.

[81] Notwithstanding the plaintiff’s submission, the notice for removal expressly states that the jurisdiction of the Federal Court to hear the matter was not admitted, and the evidence indicates that a copy of the motion filed in the Federal Court would have also been filed in the State Court. Thus, the State Court would have been aware of the application to transfer the proceeding to the Federal Court and that there was an objection to jurisdiction.

[82] In my view, the plaintiff has not shown that the filing of the notice of removal was only necessary or only useful if the objection to jurisdiction had been waived or never been entertained at all. To the contrary, it is clear that the underlying purpose of this step was to contest jurisdiction. While this no doubt delayed the entry of a default judgment in the District Court, that feature did not negate the underlying purpose of contesting jurisdiction.

[83] I therefore conclude that this step was not a voluntary submission to the jurisdiction of the Nevada Courts.

Filing an appearance in the Federal Court

[84] Having been filed the same day as the notice to remove, the appearance was part and parcel of the notice to remove. It does not in any way detract from that document. I also note that in Akai Pty Ltd v People’s Insurance Co Ltd50 Thomas J held that the technical step of filing a notice of appearance needed to be seen in context, was not inconsistent with the defendant’s challenge to the jurisdiction of the Court, and the defendant had not submitted to the foreign jurisdiction. I am satisfied that a similar approach should be adopted on this occasion.

[85] It follows that the defendant did not submit to the jurisdiction of the Nevada

_{Courts by filing an appearance.}

50 Akai Pty Ltd v People’s Insurance Co Ltd [1997] CLC 1508 (QB).

Payment of costs ordered by the Federal Court

[86] On 6 March 2009 a Federal Court Judge ordered the defendants to pay costs in the sum of US$15,566.95 to the plaintiff. Those costs were subsequently paid by Mr Wamsteker, one of the defendant’s co-defendants. In his evidence in chief the defendant said that he did not contribute to those costs. When asked under cross- examination whether there had been a deal between the defendants about payment of costs, the defendant said that Mr Wamsteker was going to cover the costs of defending on the jurisdiction basis.

[87] On the plaintiff’s analysis this effectively amounted to the defendant personally paying the costs ordered by the Federal Court and thereby constituted a submission to the jurisdiction. I do not think the evidence goes far enough to support that proposition. There is no evidence that the defendant was going to reimburse Mr Wamsteker, and, given the numerous possible scenarios as to costs as between the defendants, it would be unsafe to draw that inference.

[88] Under those circumstances the plaintiff’s proposition that the payment of

costs gave rise to a submission to the jurisdiction is untenable.

Making an application for forum non conveniens in the State Court

[89] This is one of the main planks of the plaintiff ’s argument. It focuses on the challenge based on forum non conveniens as opposed to the challenge based on the lack of personal jurisdiction. There is, however, a degree of overlap between the two.

[90] I have already rejected the underlying proposition that simply by relying on the forum non conveniens ground the defendant was submitting to the jurisdiction of the State Court. But that is not the end of the matter. It is conceivable that a protest on this ground could be formulated in such a way that instead of being an appearance “merely to contest the jurisdiction of the Court” in terms of Von Wyl, it actually became a submission to the jurisdiction.

[91] It is therefore necessary to examine the motion to dismiss. The defendants

moved to dismiss the plaintiff’s amended complaint:

...for lack of personal jurisdiction over them. In the alternative, these foreign individual defendants move to dismiss the Complaint on the grounds of forum non conveniens. This motion, which is submitted without prejudice to any and all objections that the individual defendant may have to personal jurisdiction and the appropriateness of forum, is based upon...

A 12 page document headed “Points and Authorities” was attached to the motion to dismiss.

[92] This attached document began with an introduction outlining the matter before the Court. It then included a statement of facts which made brief reference to the plaintiff’s employment history with Compudigm, the employment agreement in issue, and the citizenship and residency status of the individual defendants. The remainder of the document comprised argument in support of the propositions that the Court lacked personal jurisdiction and that the doctrine of forum non conveniens should lead to dismissal.

[93] As to personal jurisdiction the document contained the defendant’s argument with reference to relevant case law. It also referred to the connection between the various causes of action and the jurisdiction issue. The last part of the document (a little over one page) advanced argument as to dismissal on the grounds of forum non conveniens. The relevant principles were outlined with reference to United States cases and it was asserted that New Zealand was “the proper, most convenient forum to address Gordhan’s New Zealand-based claims”. It also referred to the availability of witnesses and documents.

[94] I do not accept that the motion to dismiss and its supporting document were formulated in a manner that amounted to a submission to the jurisdiction of the Nevada State Court. Whether the forum non conveniens component is read in isolation or in conjunction with the whole document it is clear that the defendants are objecting to the jurisdiction of the Court. They are not asking the Court to become involved in the merits of the substantive claim. While the Court might have been asked to exercise a discretion I am satisfied that Von Wyl and Williams and Glyn’s

Bank put an end to any suggestion that this automatically constitutes a submission to the foreign jurisdiction.

[95] On my analysis it cannot be said that the motion to dismiss was only useful if the objection had been waived or never entertained at all. Thus the forum non conveniens ground did not amount to a submission to the jurisdiction of the State Court.

Seeking to argue the merits of the case in a motion to dismiss for lack of personal jurisdiction

[96] To a large extent this matter has already been addressed by the forum non conveniens discussion.

[97] Essentially the plaintiff is claiming that the defendant was inviting the State Court to become involved in the merits by referring to such matters as the employment history. I cannot accept that proposition. As I see it the reference to this history only provides a context within which the objection to jurisdiction can be considered. In my view there is not the slightest suggestion that the Court is being called upon to consider the merits and this ground must also fail.

[98] This last ground alleging that the defendant submitted to the jurisdiction having failed, it becomes inevitable that the proceeding cannot succeed. Under those circumstances the fraud issue will not need to be considered.

Outcome

[99] There will be judgment for the defendant.

[100] My preliminary view is that the defendant is entitled to costs on the 2B scale. If counsel on either side wish to be heard they should lodge memoranda within one month of the delivery of this judgment. Individual memoranda should not exceed three pages. Otherwise, upon expiry of that period, there will automatically be an order that the plaintiff pay the defendant costs on the 2B scale.

Solicitors:

Bret Gustafson, Auckland, [e-mail]

Lowndes Jordan, Auckland, [e-mail]

Wynn Williams & Co, [e-mail] and [e-mail]