Court of Appeal discharges a worldwide anti-suit injunction

To what extent can a New Zealand court issue a permanent worldwide anti-suit and anti-enforcement injunction, preventing a person from enforcing a judgment they have already obtained from a court in the United States? In a judgment released on Thursday, the New Zealand Court of Appeal overturned an earlier High Court decision that had granted such an injunction, ruling that an injunction could only be issued as a matter of last resort.

The issue arose in the course of a dispute between Sir Owen Glenn, Eric Watson and Kenneth Wikeley, and entities associated with them. Entities associated with Mr Wikeley obtained a USD 123,750,000 judgment in Kentucky against entities associated with Sir Owen. They obtained judgment by default after serving the proceedings on Sir Owen’s agent, but who failed to notify Sir Owen of the claim. Sir Owen applied to the Kentucky courts to set aside the judgment. In a two paragraph judgment, the Kentucky court declined Sir Owen’s application on the basis that he had been properly served.

Sir Owen appealed to the Kentucky Court of Appeals, but also issued proceedings in New Zealand, which had jurisdiction because the trustee of Mr Wikeley’s entity that had obtained the judgment in Kentucky was a New Zealand company. The New Zealand High Court ruled that the agreement on which the judgment was based was a forgery, and that Mr Wikeley acted in consort with Mr Watson to bring a fraudulent claim in Kentucky based on that forged document. The High Court issued a permanent worldwide anti-suit and anti-enforcement injunction, preventing Mr Wikeley from taking any further action on the document, and preventing him from enforcing the judgment he obtained in Kentucky.

Mr Wikeley appealed, acting for himself. While the Court of Appeal accepted the High Court’s findings that the document was forged, it overturned the anti-suit and anti-enforcement injunction. It said that, while the law on anti-suit injunctions is “in a most unsatisfactory state”, an order by a New Zealand court that interferes with the administration of justice by a foreign court is a remedy of an “extraordinary character”. A New Zealand court should be “extremely cautious” before finding that there is a sufficiently real risk that justice will not be done by the foreign court to warrant an anti-suit or anti-enforcement injunction.

The Court of Appeal accepted that Sir Owen’s recourse to the New Zealand courts was understandable – desperate times call for desperate measures, it said. But even in the case of fraud, the Court of Appeal observed, United States courts are unlikely to need the assistance of the New Zealand courts in identifying fraud and ensuring that no reward flows from it. And as a remedy of last resort, an anti-suit injunction at this stage was inappropriate given that an appeal process was still underway in Kentucky. The High Court’s injunction was “exorbitant”, and it was discharged by the Court of Appeal.