Kea Investments Ltd v Wikeley

This case concerned an urgent application brought by Kea Investments Ltd to restrain the respondent, Mr Wikeley, from contravening orders made by the High Court of New Zealand. Those orders prevented Mr Wikeley from taking steps to enforce, against Kea Investments Ltd, a judgment issued by a court in Kentucky in the United States. Kea Investments Ltd alleged that Mr Wikeley had obtained that judgment by fraud. Mr Wikeley, while in Brisbane, sought to avoid the orders made by the New Zealand court by assigning the judgment to a company he had newly incorporated. Kea Investments Ltd sought, first, injunctive relief to prevent the assignment, second, orders preventing Mr Wikeley from leaving the jurisdiction, and third, a warrant for Mr Wikeley’s arrest. Justice Cooper held that the first two orders were appropriate in the circumstances but refused to issue a warrant.

Cooper J

12 April 2023

Background

On 29 June 2022, Kea Investments Ltd (“Kea”) received a statutory demand sent on behalf of the Wikeley Family Trust Ltd (“WFTL”), a company registered in New Zealand, and Mr Brian Wikeley, who is the sole shareholder and director of WFTL. [3], [12]. The statutory demand was issued in relation to a default judgment given by the Fayette Circuit Court in Kentucky in the United States for an amount in excess of $120 million USD (“Kentucky Judgment”). [3], [12]. Kea had not received any real notice of proceedings in Kentucky until it received the statutory demand. [12].

The Kentucky proceedings related to an agreement styled “Coal Funding and JV Investment Agreement” (“Coal Agreement”). [12]. On its face, that agreement appeared to be a contract entered into between Kea and WFTL in 2012. [12]. In the Kentucky proceedings, WFTL sought damages for an alleged breach of the Coal Agreement by Kea. [12].

Kea asserts that the Coal Agreement was wholly fabricated by various parties including Mr Wikeley and WFTL. [2] [12]. In fact, Kea claims to have no record of any such agreement ever existing. [12]. On that basis, Kea alleges that the Kentucky Judgment was procured by fraud. [12].

Kea unsuccessfully sought to set aside the default judgment in Kentucky. [12]. Kea then issued proceedings in New Zealand seeking damages for tortious conspiracy against various parties including Mr Wikeley and WFTL. [5]. The High Court of New Zealand granted interlocutory relief preventing those parties from taking any steps to enforce the Kentucky Judgment. [5]. However, in early April 2023, Kea became aware that Mr Wikeley was attempting to avoid those orders by assigning the Kentucky Judgment to a company that he had newly incorporated in Kentucky. [6]. At the time of the purported assignment, Mr Wikeley was present in Queensland. [8].

Kea brought urgent ex parte proceedings in the Queensland Supreme Court seeking urgent orders to prevent the frustration of the proceedings on foot in New Zealand. [6]–[8]. In particular, Kea sought interim relief in support of a New Zealand proceeding in accordance with ss 24 and 25 Trans-Tasman Proceedings Act 2010 (Cth) (“the Act”), an order preventing Mr Wikeley from leaving the country, an order requiring the delivery up of Mr Wikeley’s passport and a warrant for Mr Wikeley’s arrest. [10].

Injunctive Relief under the Act

Under s 25 of the Act, a party to a proceeding in New Zealand may apply to certain Australian courts for interim relief in support of a proceeding in New Zealand. [32]. Section 26 provides two cumulative conditions to the grant of interim relief. [33]. First, the court must consider it appropriate to grant the relief sought. [33]. Second, the court must be satisfied that if a proceeding similar to the New Zealand proceeding had been commenced in Australia, the court would have had power to grant the interim relief sought and would have granted that relief. [33].

Therefore, the issue for his Honour was whether the Court would have power to grant, and would grant, an injunction preventing Mr Wikeley from enforcing the Kentucky judgment if the New Zealand proceeding had been commenced in Queensland. Cf [44]–[45]. Justice Cooper noted that the Court clearly had jurisdiction over Mr Wikeley given his presence in Queensland. [45]. There was also a serious question to be tried in respect of whether Mr Wikeley and WTFL had engaged in a tortious conspiracy to defraud Kea. [46]–[48]. Further, his Honour noted that the balance of convenience favoured granting the injunction. [56]. Significant harm would be suffered by Kea if the Kentucky Judgment were to be enforced and Kea had offered the usual undertaking as to damages such that little prejudice would be suffered by Mr Wikeley if enforcement was delayed. [57].

On that basis, his Honour granted an injunction against Mr Wikeley which reflected the order made in the New Zealand Proceeding.

Restraint on Travel

Kea sought orders that would prevent Mr Wikeley from leaving the country and require delivery up of his passport (“No-Departure Orders”). [62]. The power to make such an order derives from s 9(3) Civil Proceedings Act 2011 and from the Court’s inherent jurisdiction. [62]. The power may be exercised “where it is just and convenient to do so”. [66]. Relatedly, the Court may make no-departure orders for the purposes of preventing an abuse of its processes or to enhance the administration of justice. [63]. In general, the Court requires probable cause for believing that the respondent will quit the jurisdiction if orders are not made. [66]. The Court must exercise the power with caution as its exercise involves the restriction of a person’s liberty. [65]. In addition, an applicant must show that it would be materially prejudiced if the respondent were to quit the jurisdiction. [66].

Justice Cooper found that Mr Wikeley had no fixed base as there was evidence that since 2013 he had spent time in Brisbane, Melbourne, Chile, Kentucky and Ukraine. [70]–[71]. In addition, Mr Wikeley’s willingness to breach the orders of the New Zealand court provided a basis to infer that he would seek to avoid similar restraints made by courts in Queensland. [73]. His Honour was also satisfied that Kea would suffer significant prejudice, as leaving the jurisdiction could allow Mr Wikeley to take steps to enforce the Kentucky Judgment without facing any sanction. [68]. As such, his Honour was willing to make the orders sought. [77]–[79].

Notably, his Honour accepted a submission that where public interest considerations arise, an applicant may not need to show cause for believing that the respondent would quit the jurisdiction if orders were not made (see Australian Prudential Regulation Authority v Siminton (No 2) [2006] FCA 336). [75]–[76]. His Honour held that it would be appropriate to make no-departure orders even if Kea could not establish that Mr Wikeley might quit the jurisdiction because there was a public interest (as expressed under the Act) in ensuring support for proceedings brought in New Zealand. [77].

In addition, his Honour noted that preventing Mr Wikeley from leaving the jurisdiction was necessary to prevent an abuse of the court’s process and to enhance the administration of justice. [78]. As a result, his Honour made orders preventing Mr Wikeley from leaving Queensland, and requiring delivery up of his passport. [79].

Arrest Warrant

Finally, Kea sought a warrant for Mr Wikeley’s arrest. [80]. That application was brought under s 100(1) Civil Proceedings Act 2011 and under r 935 UCPR. [80]. Those provisions allowed the court to issue an arrest warrant where the defendant has absconded or is about to abscond and their absence would materially prejudice the plaintiff. [81].

His Honour accepted that Kea would suffer prejudice if Mr Wikeley were to abscond and accepted that Mr Wikeley may be about to abscond. [82]–[83]. However, his Honour was not persuaded to exercise the discretion to issue the warrant. [85]. His Honour noted that on an ex parte application, the orders made should be the minimum necessary to preserve the position of the parties pending a hearing of the matter. [85]. In this case, the no-departure orders and the injunctive relief were sufficient to protect the position of Kea prior to a hearing. [86]. On that basis, no arrest warrant was issued. [88].

L Inglis