29 Mar 2012
Enforcing foreign judgments in Australia: A case study
by Douglas Bishop, Scott Grahame, Garth Williams
Your strategy for enforcing a foreign judgments in Australia must be tailored to accommodate the particular factual circumstances of the foreign judgment.
We've previously outlined the two primary methods for enforcing UK judgments in Australia. In this article we provide an example of how the theory can be put into practice by looking at a recent case in which we acted involving the enforcement of a foreign judgment.
Although the case study below concerns the enforcement of a UK judgment, our observations apply equally to enforcing judgments obtained in other foreign jurisdictions.
Case study – Independent Trustee Services Limited v Morris  NSWSC 1218
Independent Trustee Services Limited (ITS) is a UK-based professional trustee company which was appointed trustee of a number of UK pension schemes by the UK Pensions Regulator. ITS's appointment arose out of an alleged misapplication of around £52 million of the pension schemes' assets by two former trustees. In 2008, ITS commenced proceedings in the High Court of Justice of England and Wales (UK High Court) seeking to recover the funds which had been inappropriately paid out of the pension schemes and other relief. Mr Morris was one of a number of defendants in the UK proceedings.
At the time the UK proceedings were commenced, Mr Morris, a UK citizen, was living in Australia. He was served with the UK originating process in Australia but did not enter an appearance or defend the claim made against him.
The UK High Court delivered its final judgment in July 2010 (UK Judgment) and held that the £52 million had been paid out of the pension schemes in breach of trust and that Mr Morris was knowingly involved in the breach of trust. Mr Morris was ordered to pay ITS compensation of £52 million and to provide an account of the use and application of the trust assets. An order for an account is an equitable remedy whereby the court facilitates an inquiry into how trust funds or other assets have been applied.
Clayton Utz was retained by ITS to have the UK judgment against Mr Morris recognised and enforced in Australia.
UK judgment not registrable under the Act
Although the UK judgment was a money judgment delivered by a court to which the Foreign Judgments Act 1991 (Cth) extends, it was not registrable because ITS could not establish that the UK High Court had exercised jurisdiction over Mr Morris in the international sense for the purpose of the Act.
As we discussed in our last article, under the Act a UK court will be deemed to have exercised jurisdiction in the international sense if:
the defendant voluntarily submitted to the court's jurisdiction;
at the time when the UK proceedings were instituted the defendant resided in or had its principal place of business in the UK; or
the UK proceedings concerned a transaction effected through or at an office, or place of business, that the defendant had in the UK.
In this case none of the above grounds applied. Mr Morris had not submitted to the UK jurisdiction, he was residing in Australia at the time the proceedings were instituted and the UK proceedings did not concern a transaction effected through or at an office or place of business that Mr Morris had in the UK.
Given that the UK judgment was not registrable under the Act, ITS commenced proceedings in the Equity Division of the New South Wales Supreme Court to have the UK judgment recognised at common law and in equity.
Recognition at common law
The test for international jurisdiction at common law is somewhat broader then the statutory test. As with the Act, common law deems a court to have exercised international jurisdiction if the defendant voluntarily submitted to the foreign court's jurisdiction or the defendant was ordinarily resident in the country of the foreign court at the time he or she was served with the originating process.
However, there are also cases where international jurisdiction has been recognised on the basis that the defendant was a citizen of the country of a foreign court and the defendant actively used or relied upon his or her citizenship. ITS applied this third approach in the NSW proceedings to establish that the UK High Court had exercised jurisdiction in the international sense in respect of Mr Morris. To this end, evidence was adduced in the NSW Proceedings that Mr Morris was a UK citizen and that he had actively used his citizenship by:
As ITS was able to establish that the UK judgment was final and conclusive and that the UK High Court had exercised international jurisdiction, the New South Wales Supreme Court recognised and gave effect to the orders in the UK judgment which required Mr Morris to pay ITS £52 million.
Enforcement in equity
Common law will only enforce judgments requiring the payment of money. Therefore, ITS also had to enforce the UK judgment in equity to facilitate the recognition of the order in the UK judgment that Mr Morris provide an account of the use and application of the trust assets.
There are numerous cases where Australian courts exercising their equitable jurisdiction have lent assistance to the enforcement of equitable relief obtained in foreign courts. ITS relied on those authorities in arguing that the UK order for the taking of an account should be recognised in Australia. The NSW Supreme Court accepted this argument and ordered that an account be taken to ascertain how the misappropriated trust assets had been applied by Mr Morris.
Since the conclusion of the NSW proceedings Mr Morris has been repatriated to the UK where he has been charged with theft, conspiracy, and aiding and abetting fraud.
A key point to take away from this case study is that your strategy for enforcing a foreign judgments in Australia must be tailored to accommodate the particular factual circumstances of the foreign judgment in question.
Judgments obtained in foreign courts to which the Act extends will not always be registrable under the Act. However, even if such judgments cannot be registered under the Act, they may still be capable of recognition at common law or in equity.
Sitting in their common law jurisdiction, Australia courts will only give effect to money judgments (that is, judgments ordering the payment of money) but Australian courts of equity offer greater flexibility and may be prepared to lend assistance to enforcing equitable relief awarded in foreign proceedings.