Hertzog v Perlich HC Whangarei CIV-2011-488-185 [2011] NZHC 1145 (23 September 2011)

Last Updated: 20 October 2011

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

_{CIV-2011-488-185}

BETWEEN ELMAR HERTZOG UND PARTNER MANAGEMENT CONSULTANTS GMBH

Plaintiff

AND JURGEN PERLICH Defendant

Hearing: 19 September 2011 at 2:15pm

Counsel: J Strauss for Plaintiff

D J Ballantyne for Defendant

Judgment: 23 September 2011 at 11:00 AM

_{JUDGMENT OF ASSOCIATE JUDGE BELL}

This judgment was delivered by me on 23 September 2011 at 11:00am

pursuant to Rule 11.5 of the High Court Rules.

............................................. Registrar/Deputy Registrar

Solicitors:

North Harbour law, Orewa for plaintiff

Email: [e-mail])

Cor Eckard Law Office, P O Box 111 Whangarei 0140

_{Email: [e-mail]}

Copy for:

Johann Strauss, P O Box 2202 Auckland 1140

_{Email: [e-mail]}

_{Case Officer: [e-mail]}

ELMAR HERTZOG UND PARTNER MANAGEMENT CONSULTANTS GMBH V JURGEN PERLICH HC WHA CIV-2011-488-185 23 September 2011

[1] The plaintiff seeks summary judgment against the defendant on its claim on a judgment of the Landgericht Darmstadt, Germany, for €27,782 plus interest and costs of €3,849.76. Judgment was given on 11 December 2007. The amount claimed is €44,992.60 plus interest at €3.95 per day from 14 January 2011 plus costs.

[2] The plaintiff, Elmar Hertzog und Partner Management Consultants GmbH, is a private company in Hamburg, Germany. The defendant, Mr Perlich, is German, but now lives in Whangarei. On 8 April 2002 the plaintiff and the defendant entered into an agreement under which the defendant appointed the plaintiff its agent to sell his shares in his company, European Cargo Services GmbH, which had its registered office in Frankfurt am Main in the state of Hesse. The agreement provided for the payment of commission on the sale. The contract included the plaintiff’s general conditions of business, including this:

Ausschließlich zuständig für die Entscheidung von Streitfragen aus diesem Vertrage oder im Zusammenhang mit ihm sind die ordentlichen Gerichte der Freien und Hansestadt Hamburg. Es gilt das Recht der Bundesrepublik Deutschland.

[3] Different translations of this clause have been provided. The first is:

The parties agree that the civil courts of Hamburg State shall have exclusive jurisdiction over all disputes under and in connection with this agreement. This agreement shall be governed by the laws of the Federal Republic of Germany.

And the second is:

The regular courts of Hamburg shall have sole jurisdiction over any matters arising from or in relation to this contract. The law of the Federal Republic of Germany shall apply.

[4] In this context, “die ordentlichen Gerichte” means courts of general jurisdiction. In other respects, both translations convey the meaning and effect of the contractual provision. There is an express choice of exclusive forum of the general jurisdiction courts of the state of Hamburg and an express choice of German law to govern the contract. There is a separate question how effective the choice of forum provision is under German procedural law.

[5] In early 2003 the defendant sold his shares in European Cargo Services GmbH to Werner Piller for €100,000. The plaintiff claimed commission. The defendant did not pay. Later in 2003 the defendant migrated to New Zealand. The plaintiff says that the defendant’s last known address in Germany was in Mörefelden-Walldorf, in the state of Hesse.

[6] Mr Zitz, managing partner of the plaintiff, says that when the defendant did not pay, the plaintiff began debt-collection proceedings in the Amtsgericht Hamburg,1 using the automated debt collection procedure (Mahnverfahren) and relying on the provision giving Hamburg courts exclusive jurisdiction for disputes under the contract. He says that the defendant lodged an objection to the proceeding which the court accepted, and that brought the proceeding to an end. He does not describe the nature of the objection made by the defendant. He explains that the

plaintiff then had to launch proceedings in the court which had general jurisdiction over the defendant. That was the court within whose territorial area the defendant last had his domicile. That was the Landgericht2 Darmstadt in the state of Hesse. Mr Zitz said he would have preferred to have brought the proceedings in Hamburg because of the extra costs involved in suing in Darmstadt, but he says that the Landgericht Hamburg had no jurisdiction and would not have accepted the proceeding.

[7] The plaintiff also relies on a legal opinion by a German lawyer, Dr Dohm of Hamburg. Dr Dohm says that the Hamburg proceeding was served on the defendant in Germany in April 2003. He also says that the Hamburg proceeding was transferred to the Landgericht Darmstadt, which had sole jurisdiction under the

venue rules in the Zivilprozessordnung (ZPO).3 There is no evidence resolving

Mr Zitz’s statement that the Hamburg proceeding came to an end and a new

proceeding started in Darmstadt, and Dr Dohm’s statement that the proceeding was

_{transferred from Hamburg to Darmstadt for lack of jurisdiction.}

1 The Hamburg District Court. Its place in the hierarchy of German courts is similar to that of the

_{District Court in New Zealand.}

2 Landgericht, literally “state court”, is a general jurisdiction court similar to the High Court in

_{New Zealand.}

3 The German Code of Civil Procedure.

[8] The proceeding in the Darmstadt court was served on the defendant in New Zealand in June 2007. The plaintiff obtained judgment against the defendant in the Landgericht Darmstadt on 11 December 2007 for €27,782 plus interest and costs. The judgment of the Landgericht Darmstadt shows the defendant’s address as Devonport, Auckland. That was later amended to show the defendant’s Whangarei address. The judgment is a Versäumnisurteil, a judgment by default.

[9] There is no evidence that the defendant lived in Germany at the time of the plaintiff’s Darmstadt proceeding against him, took any steps in the Darmstadt proceeding or actively defended the Darmstadt proceedings.

[10] It is not disputed that the Darmstadt judgment is for a definite sum, is final and enforceable under German law and that the defendant has not paid the sums due under the judgment. It is a judgment in personam.

[11] At common law, a creditor under an in personam judgment of a foreign court may sue on that judgment in New Zealand if certain requirements are met. The foreign judgment is regarded as creating an obligation which the judgment debtor must satisfy. It is not necessary for the judgment creditor to sue on the original cause of action giving rise to the judgment. In proceedings on the foreign judgment, the judgment debtor cannot contest the merits of the decision of the foreign court.

Tipping J restated the law’s approach in Kemp v Kemp:4

It is a general principle of private international law that, subject to three exceptions, a judgment in personam of a foreign Court of competent jurisdiction, which is final and conclusive on the merits in the foreign country, is to be regarded as final and conclusive in New Zealand as between the same parties and their privies and as regards any issue which the judgment or order settles. Subject to the exceptions, such an overseas judgment is not impeachable or examinable on its merits whether for error of fact or of law. In proceedings on a foreign judgment the burden lies on the party who seeks to impeach it. The three exceptions which constitute the recognised grounds for impeachment are first that the judgment was obtained by fraud, secondly, where its enforcement would be contrary to local public policy and thirdly that the proceedings in which the judgment was obtained were contrary to natural justice. For completeness it should also be noted that a foreign judgment is not generally enforceable if it relates to taxes or penalties.

[12] The defendant has tried to suggest that he had a partial defence to the claim for commission. He says that the defendant did not complete the job and he was put to extra costs of €3,500. He also says that the plaintiff misrepresented the effect of a provision in the contract for a minimum commission of €25,600. In this proceeding, such arguments as to the merits of the plaintiff ’s case in the foreign court are not relevant.

[13] When Tipping J said “of competent jurisdiction” he meant competent under New Zealand’s jurisdiction recognition rules, not competent under the jurisdiction laws of the foreign court.

[14] In Reeves v OneWorld Challenge,5 O’Regan J summarised the requirements

for a foreign judgment to be enforced in New Zealand:

... In general terms, an order for a foreign judgment will be enforceable in

New Zealand subject to three basic requirements (“jurisdictional matters”):

(a) The foreign Court must have had jurisdiction to give judgment; (b) The foreign judgment must be for a definite sum of money; and (c) The foreign judgment must be final and conclusive.

There are limited exceptions. The two exceptions relied on in the High

Court were, as mentioned above:

(a) That enforcement of the foreign judgment would be contrary to public policy; and

(b) That the proceedings in which the judgment was obtained were opposed to natural justice.

[15] On the first requirement, that the foreign court must have had jurisdiction to give judgment, New Zealand courts apply New Zealand rules of private international law for the recognition of foreign judgments. New Zealand courts do not look to the jurisdiction rules of the foreign court to decide whether the foreign court had jurisdiction under its own rules. New Zealand courts credit the foreign court with better and more extensive knowledge of its own jurisdiction rules and will not

review a foreign court’s assumption of jurisdiction under its own rules. In Pemberton v Hughes6 Lindley MR said:

There is no doubt that the Courts of this country will not enforce the decisions of foreign courts which have no jurisdiction in the sense above explained – ie, over the subject-matter or over the persons brought before them.... But the jurisdiction which alone is important is the competence of the Court in an international sense – ie, its territorial competence over the subject matter and over the defendant. Its competence or jurisdiction in any other sense is not regarded as material by the Courts of this country.

[16] The other members of the court agreed. Rigby LJ commented that the evidence of experts ought not to have been resorted to.7

[17] In Gordon Pacific Developments Property Ltd v Conlon,8 Henry J set out the situations in which a New Zealand court will recognise that a foreign court had jurisdiction for proceedings on that judgment in New Zealand:

1. If the judgment debtor was at the time the proceedings were instituted resident (or possibly present) in the foreign country.

2. If the judgment debtor was a plaintiff in a counterclaim in the proceedings in the foreign Court.

3. If the judgment debtor, being a defendant in a foreign Court, submitted to its jurisdiction by voluntarily appearing in the proceeding.

4. If the judgment debtor, being a defendant in the foreign Court, had before the commencement of the proceeding agreed in respect of the subject-matter to submit to the jurisdiction of the Courts of that country.

[18] For the first requirement, at the start of the Hamburg proceeding Mr Perlich lived in Germany. That cannot be relied on, as it is not clear that the proceeding in the Darmstadt court was a continuation of the proceeding started in the Hamburg court. In particular, I note that although the Hamburg proceeding was served on him in Germany, the Darmstadt proceeding was served on him afresh in New Zealand.

[19] For the second requirement Mr Perlich did not make a counterclaim in the

_{Darmstadt proceeding.}

6 _{Pemberton v Hughes [1899] 1 Ch 781 (CA) at 791.}

7 _{At 795.}

8 Gordon Pacific Developments Property Ltd v Conlon [1993] 3 NZLR 760 at 766-767.

[20] For the third requirement, it is not contended and there is no evidence that Mr Perlich voluntarily submitted to the Darmstadt court by appearing and taking part in the proceeding – the plaintiff obtained judgment against him by default.

[21] Accordingly, the remaining matter for consideration is whether Mr Perlich agreed to the Darmstadt court hearing the plaintiff’s case against him before the proceeding. The rationale applying an agreement made before proceedings as a ground for recognising the jurisdiction of the foreign court to give judgment is that if a judgment debtor resists enforcement of the foreign judgment against him, the law will as a matter of justice hold him to his agreement. The judgment creditor had taken proceedings in the foreign court relying on the agreement. The judgment debtor should be held to his agreement and should not be allowed to resile from it.

[22] For the debtor to be held to his agreement, the agreement must be one that is legally enforceable against him. If the agreement is governed by New Zealand law and it is one that New Zealand contract law recognises as binding, there is clearly an agreement within the fourth requirement. But arrangements that are less than that might still be held to be an agreement for this purpose. For example, in some cases, arguments based on equitable estoppel might be available to hold a defendant to a consented submission to a foreign court.

[23] If the arrangements between the parties are governed by a foreign law, which a New Zealand court will apply under its choice of law rules, then the foreign law will decide whether there is an agreement to submit to the jurisdiction of a foreign court. Just as binding arrangements that are less than contracts under New Zealand law might still give rise to an agreement to submit to a foreign court, so it is possible that under a foreign law, arrangements that are less than contracts might still be effective agreements to allow recognition of the judgment of a foreign court.

[24] Any such agreements that are binding but do not come within the relevant contract law must still derive from the judgment debtor’s voluntary assent to the foreign court having jurisdiction over the dispute.

[25] German law governs the contract between the parties, including its interpretation. Under German law the meaning of the choice of forum provision is that the courts of general jurisdiction of Hamburg have exclusive jurisdiction to decide disputes in connection with the contract. It does not mean that the parties have chosen the courts of Hesse to hear disputes under the contract. The German lawyers who have given opinions on German law for this case do not expressly address the meaning of the provision or how German courts interpret contracts, but it is implicit in their opinions. No doubt the meaning is so obvious that it goes without saying. The German lawyers are instead concerned with the legal effectiveness of the provision under the venue provisions of the ZPO.

[26] If under German law the choice of exclusive forum provision does not mean that Mr Perlich has agreed to the courts of Hesse deciding claims under the contract, there is no reason for a New Zealand court to give the provision a different meaning. Mr Perlich has agreed only to the courts of Hamburg hearing claims against him under the contract. He has not agreed to the jurisdiction of the Darmstadt court.

[27] In case it is held that the interpretation of the exclusive choice of forum clause is to be decided under New Zealand law,9 I find that the provision is not a submission to the Darmstadt courts, but is a submission to the exclusive jurisdiction of the courts of Hamburg. That is the plain meaning of the words. It is consistent with the business purpose of the provision which was to allow the plaintiff to use local courts instead of taking proceedings in other parts of Germany and to prevent other parties taking proceedings against it in other courts.

[28] Under New Zealand’s jurisdiction recognition rules, the choice of a specified court or courts in a “law area” is not an agreement to submit to the jurisdiction of other courts in the same “law area”. There is support for this in SA Consortium General Textiles v Sun and Sand Agencies Ltd.10 That was a decision under the English Foreign Judgments (Reciprocal Enforcement) Act 1933,11 the equivalent of

_{New Zealand’s Reciprocal Enforcement of Judgments Act 1934. Goff and Shaw LJJ}

9 _{For example, for lack of relevant expert evidence on German law.}

10 _{SA Consortium General Textiles v Sun and Sand Agencies ltd [1978] QB 279 (CA).}

11 Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK), s 4(2)(a)(iii).

held that under that legislation12 submission to one foreign court in a law area could not be a submission to all courts in that law area.13 While that decision involved interpretation of the jurisdiction recognition rules under the Foreign Judgments (Reciprocal Enforcement) Act, it is relevant as those jurisdiction recognition rules

are based largely on the common law test for enforcement of a foreign judgment.

[29] Further, a choice of law provision in a contract is in general not a submission to the jurisdiction of the courts that apply that law.14 Here a choice of German law to govern the contract beside a provision for the courts of only one state in Germany to have jurisdiction cannot be interpreted as meaning that other courts in Germany can hear disputes under the contract.

[30] The plaintiff has tried to escape this consequence by adducing expert evidence as to German procedural law. Dr Dohm states that the issue to be resolved is which court has jurisdiction to adjudicate in the matter according to the contract concluded by the parties and under German law. He explains that exclusive forum clauses have limited application under the ZPO. The primary venue rule, art 12, is that a person is to be sued in courts in the area where they are domiciled. That rule may be displaced by exclusive forum provisions where the ZPO so provides. Where the ZPO does not provide for contractual choice of forum, any such contractual provision is ineffective. In this case the relevant provision in the ZPO is art 38. Under art 38(1) an exclusive forum agreement between “Kaufleute” is valid. In this case, “Kaufmann” has been translated variously as “merchant” and “businessman”. Dr Dohm says that Mr Perlich is not a Kaufmann as that word is defined in the

Handelsgesetzbuch (HGB).15 He has not given copies of the relevant provisions of

the ZPO or the HGB. He says that Mr Perlich was not a Kaufmann because, in selling his shares in his private company, he was not acting as a Kaufmann in respect

12 _{The equivalent New Zealand provision is s 6(3)(a)(iii) of the New Zealand Act.}

13 _{At 303 and 309.}

14 Sfeir & Co v National Insurance Co of New Zealand [1964] 1 Lloyd’s Rep 330 at 340; Lawrence

Collins (ed) Dicey, Morris & Collins: The Conflict of Laws (14th ed, Sweet & Maxwell, London,

_{2006 at [14-072].}

15 The German Commercial Code.

of that activity. He cites a decision of the Bundesgerichtshof,16 BGHZ 121, 224 at

228,17 but does not provide a copy of the decision.

[31] Dr Dohm explains that under art 38(2) parties may also competently agree on the exclusive jurisdiction of a particular court in Germany if one of them does not have a legal domicile (Gerichtsstand) in Germany. The validity of any agreement under art 38(1) and (2) is decided at the time of the agreement, not at the time of the proceeding. He says that as this case does not come within art 38 or any of the other limited cases where exclusive jurisdiction agreements are allowed, venue is governed by the general provision, art 12. As Mr Perlich had lived in Mörefelden in the state of Hesse at the time of the agreement, the Landgericht Darmstadt had jurisdiction. Under art 16, once Mr Perlich left Germany, the place of general jurisdiction would be his last place of residence. Accordingly only the Landgericht Darmstadt had jurisdiction to hear the plaintiff ’s case against Mr Perlich.

[32] The defendant has provided an opinion from another German lawyer, Dr Tschersich of Wuppertal. Dr Tschersich says that the parties could effectively invoke the exclusive jurisdiction of the Hamburg Courts under art 38(1) of the ZPO because the defendant was a Kaufmann within art 38(1). He refers to evidence, such

as the defendant’s last German tax return, where he is called a sole trader.18

Accordingly, because Hamburg was effectively chosen as the place of jurisdiction, that was sufficient to oust the jurisdiction of the Landgericht Darmstadt.

[33] In a summary judgment application, I cannot resolve the differences between the experts on these issues of German law. In particular, I am left in doubt as to the scope of the word “Kaufmann” and its application in this case.

[34] I do not need to resolve the differences between these experts on German law. First, the Darmstadt court has answered the question. It has accepted jurisdiction. In a proceeding to enforce the judgment in New Zealand, I cannot review the merits of the assumption of jurisdiction by the foreign court under its own

_{rules. Second, even though the Darmstadt court is to be assumed to be correct in}

16 _{The German Federal Supreme Court.}

17 _{A decision of 28 January 1993.}

18 Einzelunternehmer.

taking jurisdiction, that does not mean that a New Zealand court is bound to enforce the Darmstadt judgment. Accepting that the Darmstadt court had jurisdiction for judgment recognition purposes would mean replacing New Zealand jurisdiction recognition rules with German venue rules. The plaintiff cannot make up for the lack of evidence of agreement to the Darmstadt court having jurisdiction by invoking German venue rules.

[35] In this summary judgment application, the plaintiff has not satisfied me that the defendant does not have an arguable defence under the judgment recognition rules for the enforcement of a judgment of a foreign court in New Zealand. For the ground based on the defendant’s presence in Germany, the plaintiff has not shown that the judgment it relies on was given in the debt collection proceeding started in Hamburg and served on the defendant in Germany. For the ground based on earlier agreement to submit to the jurisdiction of a foreign court, the agreement in the contract was to submit to the courts of Hamburg, not the Landgericht Darmstadt.

[36] This means that the summary judgment application must fail. It does not necessarily mean the end of the proceeding. One matter that the parties might wish to consider is the objection Mr Perlich is said to have made in the debt collection proceeding. That has not been put in evidence. If for example Mr Perlich objected to the Amtsgericht Hamburg hearing the case against him and insisted on being sued in the court of his place of domicile, then there may be an argument that he agreed to being sued in Hesse. As German law governed the contract between the parties, such an argument would have to be based on principles of German civil law, rather than on rules of New Zealand law such as waiver and estoppel. It may be necessary to consider whether the transfer of the Hamburg proceeding to Darmstadt arose from the election of the plaintiff, the election of the defendant or by operation of law. I mention this only as a matter for the parties’ consideration.

[37] I make these orders:

(a) I dismiss the application for summary judgment;

(b) I reserve costs on the application for summary judgment; and

(c) I direct a telephone case management conference for 21 November

2011 at 2.00pm.

[38] By the time of the case management conference the parties will be expected to have completed discovery. I hope that at the conference the plaintiff will say whether it continues with this proceeding.

.......................................

R M Bell

Associate Judge