Air Nelson Ltd v Minister of Transport

[2008] NZCA 26

IN THE COURT OF APPEAL OF NEW ZEALAND

CA279/06
[2008] NZCA 26

BETWEENAIR NELSON LIMITED

Appellant

ANDTHE MINISTER OF TRANSPORT

First Respondent

ANDHAWKE'S BAY AIRPORT AUTHORITY

Second Respondent

Hearing:25 October 2007

Court:William Young  P, O'Regan and Robertson JJ

Counsel:N S Gedye and J A MacGillivray for Appellant

I C Carter and H L Dempster for First Respondent
M J Wenley for Second Respondent

Judgment:22 February 2007 at 1 pm

JUDGMENT OF THE COURT

A        The appeal is allowed.

BThe decisions of the First Respondent of 7 December 2004 and 17 November 2005 are quashed.

CThe respondents must jointly pay costs to the appellant of $6,000 plus usual disbursements.  This obligation should be shared equally by the respondents.  Costs in the High Court should be dealt with in that Court.

REASONS OF THE COURT

(Given by O’Regan J)

Table of Contents

Para No

Introduction  [1]
Issues  [4]
The Ministers’ decision-making power  [7]
The background to the first decision  [9]
The background to the second decision  [21]

Were the Ministers’ decisions to increase prices public law decisions?  [31]

Can the second decision be impugned because the Minister
was not adequately informed about Air Nelson’s opposition?   [35]

Alleged defects in the Pfiffner paper  [39]

Did these matters need to be drawn to the Minister’s

attention?[41]

Should the Court decline relief?  

Judgment of Gendall J  [57]
         Declining relief  [59]
         Opportunism  [63]
         The s 39 argument  [64]
         Remedy serving no useful purpose  [65]
         Delay  [66]
         Conclusion on discretion to decline relief  [71]
         Remedy with respect to the second decision  [72]
Result  [77]
Costs  [78]

Introduction

[1]       Hawke’s Bay Airport is owned by a joint venture comprising the Crown (50%), Napier City Council (26%) and Hastings District Council (24%).  Its major customer is Air Nelson Limited which operates under the name Air New Zealand Link.  The airport is administered by a board appointed by Napier City Council and Hastings District Council.  That board is the Hawke’s Bay Airport Authority.

[2]       Landing charges for airlines using the airport are set by the Minister of Transport.  This case concerns a challenge by Air Nelson to two separate decisions made by successive Ministers of Transport increasing the charges for the use of the airport.  The first, made in December 2004, increased charges by 20%.  However it transpired that the Authority was seeking only a 9% increase.  A second decision was made by a different Minister of Transport in November 2005, increasing charges by 9% instead of 20%.

[3] Air Nelson applied for judicial review of both decisions. The respondents accepted that the first decision was invalid because in making it the Minister had been provided with incorrect information by officials. Gendall J found the second decision was valid and exercised his discretion not to grant a remedy in respect of the first decision: [2007] NZAR 266. Air Nelson appeals against Gendall J’s decision.

Issues

[4]       The issues which arise for consideration are:

(a)Whether the decision by the Minister to increase prices for the use of the airport was simply the exercise of the power of a private owner to determine the price of a service, or was a decision having a regulatory and public law element;

(b)Whether the second decision can be impugned because information about Air Nelson’s opposition to the price increase was not made known to the Minister when he made the decision.  This requires consideration of the extent to which information known to officials of the Ministry of Transport who were involved in the decision making process needed to be communicated to the Minister making the decision;

(c)Whether the Court should decline to grant a remedy in relation to the first decision (in view of the acknowledgement that it is defective) and, in the event that the Court finds that the second decision is defective, what remedy, if any, should be granted in respect of it.

[5]       Four issues which were in dispute in the High Court were not pursued in this Court.  These are:

(a)It is not disputed for the purposes of this appeal that the decisions of the Ministers in the present case were made under reg 13 of the Civil Aviation Charges Regulations 1991 (No 2).  Those Regulations were made under s 100(1)(a) of the Civil Aviation Act 1990 which provides for the making of regulations “prescribing, or providing for the fixing of, fees and charges payable under this Act”.  The contention which was made in the High Court, that the decisions were made under s 38(4) of the Civil Aviation Act, was not pursued in this Court;

(b)The Minister does not contest Gendall J’s finding that there was an obligation to consult with Air Nelson (and other airlines using the airport) before a decision to increase landing charges was made.  The Ministry’s policy is that such consultation should occur.  Counsel for the Ministry indicated that he did not consider there was a legal obligation to consult but did not contest the High Court finding to the contrary.  In those circumstances we proceed on the basis that consultation was required;

(c)Air Nelson does not argue in this Court that the consultation processes undertaken prior to the Ministers’ decisions were inadequate and that the decisions were vitiated on that basis.  That was not an indication of satisfaction with the processes, but rather a concentration on other grounds for review;

(d)In the High Court, Air Nelson argued that the second decision was reached in breach of s 27 of the New Zealand Bill of Rights Act 1990 (right to the observance of the principles of natural justice).  Gendall J found that s 27 was not engaged on the facts.  The New Zealand Bill of Rights Act claim is not pursued on appeal. 

[6]       Before we embark on our evaluation of the issues, we set out a brief analysis of the decision-making power exercised by the Ministers and the background to the decisions under challenge.

The Ministers’ decision-making power

[7]       Regulation 13 provides for the setting of landing charges at a joint venture or Crown airport (the airport is a joint venture airport for this purpose in terms of reg 2).  It provides:

13.        Differential airport charges

(1)The Minister may fix differential airport charges in respect of any joint venture or Crown airport. 

(2)Differential airport charges shall be payable by operators to the Airport Authority, or to the Secretary if the airport authority is the Crown, in such manner as is determined by the Airport Authority concerned or the Secretary, as the case may be.

[8]       It was this power that the Ministers exercised in this case (see [5](a) above).

The background to the first decision

[9]       The Authority initiated a review of the landing charges at the airport in November 2002.  The charges then in force were those which had been set by the Minister of Transport in 1998.  The Authority engaged Ernst & Young to prepare a report, which recommended that landing charges be increased by 24.4%.  The report used the “building block” methodology, which establishes an “annual landing charge revenue requirement”.  This methodology had been applied by the Commerce Commission in its 1998 airport price inquiry.  It provides for the calculation of the annual landing charge revenue requirement by establishing an appropriate return on capital assets (using the capital asset pricing model to establish the weighted average cost of capital); making allowances for depreciation, efficient operating costs and tax; and deducting revaluation gains and non-aeronautical revenue. 

[10]     As noted earlier, the Ministry’s policy is that consultation should take place with airport users before any changes are made to the landing charges at joint venture airports.  The Authority undertook this consultation.  Air Nelson as the predominant user of the airport was the main focus of the consultation. 

[11]     Having received the Ernst & Young report in August 2003, the Authority began consultations in October 2003.  There was extensive correspondence and a number of meetings between the Authority and Air Nelson between November 2003 and July 2004.  During this time the Authority’s proposal to increase prices was altered, as Air Nelson expressed dissatisfaction with the fact that a firm proposal was not placed in front of it. 

[12]     Eventually the Authority settled on a 25% increase, subsequently reduced to 20%.  The Authority wrote to Air Nelson in July 2004 informing it of the proposed increase and terminating the consultation.  Before receiving that letter, Air Nelson had written to the Secretary of Transport setting out its objection to the proposed increase and the reasons for that objection.  These were primarily that the Authority had misapplied the building block methodology, abused a monopoly position and failed to optimise its assets or contain its costs. When it received the Authority’s letter, Air Nelson wrote to the Authority expressing its disappointment that the consultation had ended and seeking a meeting with the Authority before a final decision was made and a delay in any increase until that meeting had occurred.  For the first time, Air Nelson informed the Authority of the possibility that it would be making fleet changes that could influence the Authority’s revenue in future years and, therefore, the need for a price increase.

[13]     Ministry officials, unaware of Air Nelson’s request for a delay, set in train the process for obtaining a decision from the Minister.  A Ministry official, Mr Litten, made a submission to the then Minister, the Hon Pete Hodgson on 2 September 2004.  The Minister did not consider that Mr Litten’s paper provided sufficient information for him to make the determination and declined to make it.  Mr Litten advised the Authority that no decision had been made by the Minister.

[14]     The Authority then wrote to Air Nelson saying that implementation of new landing charges would be delayed until 1 October 2004.  It agreed to re-examine landing charges after it received information about Air Nelson’s fleet replacement programme.

[15]     On 13 October 2004, Air Nelson wrote to the Authority about the fleet replacement programme.  It informed the Authority that Air New Zealand, Air Nelson’s parent company, had decided to replace Air Nelson’s fleet of Saab 340 aircraft with Bombardier Q300 aircraft on a one for one basis.  (The Bombardier Q300 had previously been known as the Dash 8 300.)  The 1998 Ministerial determination of landing charges for the airport had provided a price for the landing of Dash 8 aircraft, because Ansett New Zealand had regularly operated a service using a smaller version of the Dash 8, the Dash 8 200, at the time that determination was made.  (There was some discussion at the hearing before us as to whether the landing charge prescribed for the “Dash 8” in the 1998 Ministerial determination would apply to the Q300.  We were told that, if it did not, another provision of the determination would apply, and the landing charge would be considerably higher.  However, that is not in issue in the present appeal). 

[16]     The Air Nelson letter indicated that it was intended that flights using the Q300 would be as frequent as flights using the (smaller) Saab 340, although it accepted that seat load factors would drop.  As the landing charge for the Dash 8/Q300 under the 1998 Ministerial determination was significantly higher than that for the Saab, the result of the introduction of the Q300 would be a very substantial increase in the airport’s revenue without a need for any increase in landing charges.

[17]     The Authority replied to Air Nelson in November, indicating that it had updated its pricing model to take account of the aircraft replacement programme and made other changes, the effect of which was to drop the proposed increase in landing charges to 9%.  Air Nelson replied indicating concern at inadequate consultation and reiterating its earlier criticism of the building block methodology.  It did not accept that the 9% increase was necessary. 

[18]     Air Nelson then wrote to the Secretary of Transport in early December, reiterating its concerns.  It pointed out that the introduction of Q300s would increase landing charges per flight by more than 50%.  It said this, together with the 9% increase in landing fees proposed by the Authority, would represent a revenue growth over three years of more than 60%.  It contrasted this with the Authority’s earlier indication that it was seeking to increase its gross revenues by 42.7% (composed of 22.7% growth and a 20% increase in prices).  A similar letter was sent to the Authority.

[19]     Meanwhile, Mr Litten had prepared a new submission to the Minister seeking a decision to increase charges by 20%, apparently unaware of the correspondence which had passed between the Authority and Air Nelson, and the Authority’s decision to seek only a 9% increase, and not a 20% increase.  This revised paper was submitted to the Minister on 1 December 2004.  It included the following statement:

The airport authority has consulted with airlines … and modified its method of calculating landing fees following the airlines’ suggestions.  The proposed level of fee increase of 20% has been accepted by the airlines, and is below the maximum increase of 25% according to the revised formula agreed with airlines using the airport. 

[20]     It is not disputed that this statement did not reflect Air Nelson’s position.  On 7 December 2004, Mr Hodgson approved an increase in landing fees of 20%, effective from 1 January 2005.

The background to the second decision

[21]     Apparently Air Nelson was not informed of the first decision, though it received invoices from 1 November 2004 for landing charges representing a 9% increase of the charges set in 1998 (notwithstanding that the Minister had decided that there should be a 20% increase).  Air Nelson refused to pay the 9% increase (although one payment was made “inadvertently”).  Air Nelson continued to pursue the matter with the Ministry and in March 2005 it received a reply which included the following statement:

The Ministry’s inquiries confirmed that, as a result of the views expressed through the consultation process, modifications were made to the landing fee formula and to the assumptions on which the fee was based.  The proposed level of fee increase of 20% was accepted by the airlines and was below the maximum increase of 25% according to the revised formula agreed with airlines using the airport. 

[22]     Further discussions and meetings occurred between the Authority and Air Nelson, but the Authority decided not to reconsider the proposed 9% increase.  Air Nelson then corresponded with the Ministry about the whole process.  It drew to the Ministry’s attention the replacement of the Saab 340 fleet with Q300 aircraft and the significant increase in revenue for the Authority which this would bring about.

[23]     This prompted the Ministry to undertake an informal internal review of the process.  During this review, the Ministry became concerned that the Authority had no power to vary the charges set by the Minister (by effectively reducing the 20% increase to a 9% increase).  It effectively invited the Authority to apply to the Minister for a fresh increase of 9%.  The Authority did so.

[24]     A paper was prepared for the Minister of Transport, the Hon David Parker, who had replaced Mr Hodgson.  That paper was presented to the Minister on 4 November 2005.  It was prepared by a Ms Pfiffner, an adviser in the Ministry.  It was not an extensive paper.  It noted Air Nelson’s objection to paying a 9% increase, but did not set out the reasons for the objection.  Air Nelson’s objection was described as follows:

Air Nelson, a member of the Air New Zealand Link group and main airline operating flights into Hawke’s Bay Airport, opposed the proposal to increase rates, querying the accounting methodology used by the airport.

[25]     Nothing was said in the paper about the fleet replacement programme, or its impact on revenue.  The paper recommended to the Minister that he amend the charges to 9%.  The Minister decided to do so on 17 November 2005, and that decision was to take effect from 1 December 2005.

[26]     In his affidavit prepared for the present proceedings, Mr Parker described his decision-making process as follows:

I did not act under the direction of the Hawke’s Bay Airport Authority.  I acted based on my own consideration of the information in Ms Pfiffner’s submission and my own conclusions on the merits.  If I had disagreed with the reasoning and recommendations in Ms Pfiffner’s submissions I would not have signed the submission.  In fact I did agree with Ms Pfiffner’s  reasoning and recommendations and decided to accept her recommendations by signing the submission.

[27]     A few days later the Ministry wrote to Air Nelson informing it that the informal review was complete and that the Ministry was of the view that the Authority’s consultation process had been adequate.  It did not mention the Minister’s second decision.

[28]     Air Nelson then sought disclosure under the Official Information Act 1982 of all documents prepared by the Ministry after 1 January 2002 in correspondence between the Ministry and other parties in relation to the price increase.  Air Nelson was apparently still not aware of the Minister’s second decision when this request was made.  The Authority notified Air Nelson of the decision on 9 January 2006.

[29]     Air Nelson continued to protest and refused to pay the 9% increase.  Discussions between the Authority and Air Nelson did not resolve the issue, and Air Nelson commenced judicial review proceedings on 1 May 2006.  The following day the Authority filed a statement of claim in the District Court at Napier seeking payment of the unpaid landing charges.  It was, at that stage, unaware that Air Nelson had already filed judicial review proceedings.  When it learned of this, it did not pursue the District Court claim.

[30] We now turn to the issues identified at [4] above.

Were the Ministers’ decisions to increase prices public law decisions?

[31]     Counsel for the Minister, Mr Carter, submitted that the Minister’s decision in this case was purely commercial.  The Minister was setting the price for the use of an asset partly owned by the Crown.  He said it was necessary for the decision about pricing to be made by the Minister because of the impracticalities of having decisions of this kind made by a joint venture consisting of two local authorities and the Crown, and that this appeared to be the reason that the price setting power was put in the hands of the Minister.  However, as noted earlier, he did not contest the finding of the High Court Judge that a consultation process had to be undertaken before a decision was made.

[32]     It is true that the Airport Authorities Act 1966 provides that every airport managed by an airport authority is to be run as a commercial undertaking (s 4(3)).  Additionally the Civil Aviation Act provides that where the Minister does anything that is “necessary, convenient, or incidental to the establishment, maintenance, and operation of any aerodrome under his or her complete or partial control”, he must do so as if the operation of the aerodrome were a commercial undertaking (s 93(3)).

[33]     Notwithstanding these provisions, we consider that the Ministerial power in this case has a dual commercial and regulatory focus.  We do not accept that the Ministerial decision is simply that of the owner of an asset setting the price for the use of that asset.  We find that the decision has a public law aspect for these reasons: 

(a)Regulation 13 is made under s 100 of the Civil Aviation Act in which Parliament has provided for the regulation of a number of matters having a clear public law focus: in addition to regulations dealing with the fixing of fees and charges, s 100 permits regulations dealing with breaches of rules made under the Civil Aviation Act, penalties in respect of those breaches, and the specification of trans-Tasman mutual recognition of aviation-related certification.  The inclusion in s 100 of the price-setting provision supports the view that Parliament considered pricing to have a public aspect;

(b)If the fixing of prices by the Minister were a purely commercial action, it would not have needed to be undertaken by the Minister.  The Authority could have fixed the prices within its general power to establish and carry on the airport under s 3(1) of the Airport Authorities Act.  Further there is no suggestion that the Minister has made any other business decisions in his putative capacity as part owner;

(c)If the fixing of prices by the Minister was simply the action of an owner setting prices, it would involve one party to a joint venture purporting to make a business decision that would bind each of its co-venturers.  That would be unusual in any joint venture, but would be even more so in this case where the Minister has effectively entrusted responsibility for the management of the airport to the two Councils represented on the Authority;

(d)Given the Ministry’s acceptance of the obligation to consult, it can hardly be said that this does not carry with it an obligation on the part of the decision-maker to take into account information gained as a result of the consultation which is relevant to the decision.

[34]     We proceed on the basis, not disputed in principle by counsel for the Minister, that the Minister’s decision is a statutory power of decision which is subject to review in terms of s 3 of the Judicature Amendment Act 1972.  Given the dual commercial and regulatory nature of the decision-making power, it involves a broad area of discretion in which the Minister is required to consider relevant matters and to disregard irrelevant matters.  This case turns on the question of whether the latter Minister, Mr Parker, was sufficiently informed so as to take into account matters that were relevant to the decision.  It is to that aspect of the case that we now turn.

Can the second decision be impugned because the Minister was not adequately informed about Air Nelson’s opposition?

[35]     Air Nelson attacked the second decision on a number of separate bases in the High Court, but the focus of the appeal was on the failure of the Pfiffner paper to inform the Minister of Air Nelson’s opposition to the price increase, including its opposition to the 9% increase in charges which the Authority sought to implement after the first decision and the reasons for its continued opposition.

[36]     Air Nelson did not pursue in this Court its argument that the decision was reached in breach of natural justice owing to inadequate consultation.  It did, however, argue in this Court that the decision could be impugned on the basis of mistake of fact, failure to take into account a relevant consideration and abdication of discretionary power.  It also argued, somewhat faintly, that there was procedural unfairness because Air Nelson was precluded from having its objections stated to the Minister making the second decision.  We propose to consider all these grounds together. 

[37]     In substance, the complaint made by Air Nelson is that, when Mr Parker made the second decision, he made it in ignorance of Air Nelson’s opposition to the price increase.  Air Nelson placed particular emphasis on the fact that Mr Parker was not told that Air Nelson intended to introduce bigger planes (the Q300s) flying with the same frequency as the Saab 340s, which would mean that, even without a price increase, the airport’s revenue would increase substantially. 

[38]     This requires us to consider carefully the Pfiffner paper and whether it adequately informed the Minister of the nature of Air Nelson’s opposition to the price increase.  It also requires us to consider whether information which was in the possession of the Ministry and taken into account by Ministry officials in preparing the advice to the Minister can be treated as if it was taken into account by the Minister himself.  We will deal with those matters in the above order. 

Alleged defects in the Pfiffner paper

[39]     Counsel for Air Nelson, Mr Gedye, pointed to the following aspects of the Pfiffner paper which he said were crucial defects:

(a)There was no account of the errors in the process which had led to the first decision, particularly the failure to alert Mr Hodgson to the fact that Air Nelson opposed the price increase, and to draw his attention to the fact that the Authority was seeking only a 9% increase, not a 20% increase;

(b)Although the paper said Air Nelson refused to pay the 9% increase, it did not give any information regarding the reasons for this.  It stated that Air Nelson had agreed to pay the 9% increase in respect of the Q300 aircraft, when in fact this payment had been made by mistake and Air Nelson had made it clear that it did not agree to the increase;

(c)It said that other aircraft operators were paying the increased prices which, though literally true, failed to acknowledge that Air Nelson was responsible for the vast majority of services into and out of the airport;

(d)It did not advise the Minister of the correspondence that had passed between Air Nelson and the Ministry between July 2004 and June 2005, or the informal internal review process which the Ministry had carried out;

(e)It said nothing about the effect of the fleet replacement programme, or about Air Nelson’s contention that this obviated the need for any increase in landing charges;

(f)It did not mention in any detail the issues that had dominated negotiations between the Authority and Air Nelson: the pricing methodology, Ernst & Young’s recommendations, the airport’s forecast expenditure, or the airport’s sources of income;

(g)It implied to the Minister an inaccurate factual picture, namely that the Minister was now required to remedy a mistake which had led to a 20% increase when only a 9% increase was desired.  This created the impression for Mr Parker that Mr Hodgson had had sufficient information to justify a 20% increase, and that therefore that a 9% increase was clearly well within the boundaries of acceptability.

[40]     We accept that these criticisms are fairly made by Air Nelson.  In our view the paper did not provide the Minister with a fair and accurate picture of the matters which Air Nelson had raised during the consultation that were relevant to the decision.  In particular, the paper did not apprise the Minister of the continuing opposition of Air Nelson to any increase in landing charges and the reasons for that opposition, particularly the impact of the introduction of the Q300 aircraft.  Nor did it provide an accurate account of the flaws in the process leading up to the first decision, which were such that that decision should not have been seen as a base from which to begin consideration for the second decision. 

Did these matters need to be drawn to the Minister’s attention?

[41]     Counsel for the Ministry argued that it was unnecessary for these matters to be drawn to the Minister’s personal attention.  He said that it was information that had been taken into account by officials in preparing their advice to the Minister, which was sufficient. 

[42]     In the High Court, that argument was upheld by the Judge, applying statements made by Lord Diplock in Bushell v Secretary of State for the Environment [1981] AC 75 (HL). The Judge found that knowledge held by Mr Hodgson as a result of the first decision and by officials within the Ministry was effectively imputed to Mr Parker when he made the second decision. That being the case, the objections made by Air Nelson in its correspondence and discussions with the Authority and the Ministry were to be treated as if they had been communicated to the Minister. Gendall J said the Minister was not required personally to acquaint himself with all of this information and was “entitled to rely upon the information gathering abilities and expertise of the Ministry” (at [74]).

[43]     In this Court, Mr Gedye said this involved a misinterpretation by the Judge of Bushell.  He accepted that Bushell was authority for the proposition that it was not necessary for every aspect of a party’s opposition to a particular course of action to be drawn to the attention of a Minister for the purposes of the exercise of a decision-making power.  But he said a decision would still be impugned if key points were not directly communicated to the Minister.  In order to evaluate that submission, we need to consider exactly what Lord Diplock said in Bushell.  The nature of the decision-making process in that case was quite different from that in issue in this case, but the comments made by Lord Diplock are of general application.

[44]     In Bushell, Lord Diplock said (at 95):

To treat the minister in his decision-making capacity as someone separate and distinct from the department of government of which he is the political head and for whose actions he alone in constitutional theory is accountable to Parliament is to ignore not only practical realities but also Parliament’s intention.  Ministers come and go; departments, though their names may change from time to time, remain.  Discretion in making administrative decisions is conferred upon a minister not as an individual but as the holder of an office in which he will have available to him in arriving at his decision the collective knowledge, experience and expertise of all those who serve the Crown in the department of which, for the time being, he is the political head.  The collective knowledge, technical as well as factual, of the civil servants in the department and their collective expertise is to be treated as the minister’s own knowledge, his own expertise.  It is they who in reality will have prepared the draft scheme for his approval; it is they who will in the first instance consider the objections to the scheme and the report of the inspector by whom any local inquiry has been held and it is they who will give to the minister the benefit of their combined experience, technical knowledge and expert opinion on all matters raised in the objections and the report.

[45]     After noting the size of the inquiry at issue in Bushell, Lord Diplock continued (at 96 – 97):

It is evident that an inquiry of this kind and magnitude is quite unlike any civil litigation and that the inspector conducting it must have a wide discretion as to the procedure to be followed in order to achieve its objectives.  These are to enable him to ascertain the facts that are relevant to each of the objections, to understand the arguments for and against them and, if he feels qualified to do so, to weigh their respective merits, so that he may provide the minister with a fair, accurate and adequate report on these matters.

(Our emphasis)

[46]     His Lordship said (at 102):

No one could reasonably suggest that as part of the decision-making process after receipt of the report the minister ought not to consult with the officials of his department and obtain from them the best informed advice he can to enable him to form a balanced judgment on the strength of the objections and merits of the scheme in the interests of the public as a whole … .

[47]     Bushell is important in two respects.  First, it reaffirms the principle enunciated in Carltona Ltd v Commissioners of Works [1943] 2 All ER 560 (CA). In that case, Lord Greene MR said that public business could not be carried out if the Minister was personally required to consider every matter personally: at 563. Therefore, responsible officials can exercise the Minister’s powers. Nevertheless the decision is still the Minister’s and he is answerable to Parliament in respect of it. This is not actual delegation because delegation requires a distinct act by which power is conferred upon an official exercising the Minister’s power. Rather, the officials’ power, where their discretion to act in the Minister’s name is unarticulated, derives from a general rule of law: Wade Administrative Law (9ed 2004) at 320. 

[48]     Secondly, Bushell circumscribes this unarticulated discretion of the Minister’s staff to act in the Minister’s name by requiring that the Minister be apprised of the key aspects of the officials’ findings.  This is reflected in Lord Diplock’s reference to the provision by the relevant officials to the Minister of a “fair, accurate and adequate report” on the various objections, the arguments for and against them and, if appropriate, the merits.  As Lord Diplock puts it, the Minister must “form a balanced judgment on the strength of the objections and merits”.  Professor Joseph puts the matter this way in Constitutional and Administrative Law in New Zealand (3ed 2007) at 915:

[The Bushell] principle sanctions the fact-finding and hearing of evidence and submissions by departmental officials but it does not absolve Ministers of the responsibility of decision.  Ministers need not address all the minutiae but the decision must, in the end, be theirs.

Bushell established a half-way house solution in preference to the Carltona doctrine.  Greater accountability is retained under the Bushell principle: the Minister personally must “decide” and any flaw in the departmental fact-finding or report will open the decision to review.

(Citations omitted.)

[49]     Bushell was adopted by this Court in CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 (CA). The claimants in that case challenged the validity of an Order in Council which applied the National Development Act 1979 to a proposed aluminium smelter. Application of the Act in this way meant that ordinary statutory procedures for seeking planning consents were bypassed. The decision to apply the Act to a project was made following an application to the Minister of National Development. The Minister referred the application to the Planning Tribunal for an inquiry, report and recommendation. The Tribunal issued its report, which was considered by the Governor-General in Council who made the requisite Order applying the Act to the project.

[50]     One of the challenges to the Order was that the Cabinet and Executive Council members who considered the application did not take account of relevant considerations.  Cooke J approved Lord Diplock’s statement that the collective knowledge of the Minister’s office is to be treated as the Minister’s own knowledge.  However Cooke J noted that the criteria in the statute in issue were intended by Parliament to be a safeguard, saying (at 183):

I think that there will be some matters so obviously material to a decision on a particular project that anything short of direct consideration of them by the Ministers collectively would not be in accordance with the intention of the Act.

[51]     Richardson J said that the inference that Ministers had not addressed their minds to relevant considerations should not be lightly drawn: at 201 (see also the judgment of McMullin J at 211).  He approved Lord Diplock’s remarks in Bushell, saying they reflected the “realities of decision-making”. However Richardson J did say that (at 200):

If relevant considerations are to be taken into account it is obvious that the decision-maker should not be misinformed as to established and material facts … .

[52]     A similar view had been expressed in this Court in Daganayasi v Minister of Immigration [1980] 2 NZLR 130 (CA). The Court held in that case that the Minister was labouring under a mistake of fact based on an inadequate report furnished to him. Cooke J said (at 149):

I would hold in such a case as this that when the Minister instructs a referee to ascertain the facts for him and report, the Minister should bear responsibility for a misleading or inadequate report.  The Minister has implied authority to delegate the function of making inquiries, but if as a result the Minister is led into a mistake and a failure to take into account the true facts, it is not right that the appellant should suffer.

[53]     We accept Mr Gedye’s submission that the failure to provide a “fair, accurate and adequate report” meant that the decision made by Mr Parker in this case was flawed.  It is not enough that officials in the Ministry were aware of Air Nelson’s objections.  Mr Parker needed to be given a sense of the context in which the first decision was made, and contents of the correspondence which passed between Air Nelson and the Authority preceding the decision.  This included the bases upon which Air Nelson opposed the need for price increases – namely objection to the building block methodology and the later reliance on the Q300 fleet replacement programme.  The paper also made no mention of the airport’s financial situation – how much revenue it wanted, needed, or had accrued in the past.  The paper was predicated on the basis that a 20% increase had been justified (for reasons unexplained) and that there was therefore even greater justification for a 9% increase.

[54]     The Minister needed to be apprised of these matters by his officials, at least in general terms, so that he could consider them and, if he thought it necessary to do so, request further information about them.  These matters were in terms of CREEDNZ “so obviously material” that their omission from the Minster’s direct consideration meant his decision was flawed.

[55]     The particular ground of judicial review on which this finding is made is secondary to the finding itself.  We think the failure of the Pfiffner paper to mention the matters to which we have referred is probably best characterised as having led to the Minister’s failing to take into account relevant considerations.  This Court adopted a similar characterisation of the ground of review in CREEDNZ: at 172. We make it clear that we make no criticism of the Minister himself in this regard: the failure to take into account these considerations resulted from the failure of officials to make him aware of them.

[56]     For these reasons, we conclude that the second decision, which was based on the recommendations in the Pfiffner paper, was taken without cognisance of significant matters.  It was issued in circumstances where the decision-maker did not take into account relevant considerations.  We therefore respectfully disagree with this aspect of the High Court decision.

Should the Court decline relief?

Judgment of Gendall J

[57]     Gendall J declined to grant a remedy in respect of the first decision for the following reasons: 

(a)Between the date upon which the 20% increase took effect (1 January 2005) and the effective starting date of the second decision (1 December 2005), all the other operators of the airport knew that what was sought was a 9% increase and all apart from Air Nelson had been happy to pay it.  Therefore, for Air Nelson to seize upon the Ministry’s misunderstanding so as to pay nothing in this period was “opportunistic”;

(b)Section 39 of the Civil Aviation Act permitted the Authority to rebate charges levied, meaning the first decision did not need to be enforced at the 20% level.  The Authority could simply rebate the difference between the 9% increase and the 20% increase as an alternative to quashing the first decision;

(c)A reconsideration of the first decision would only afford Air Nelson more time.  When the second decision was made as at December 2004, there was ample evidence justifying a 9% increase in landing charges.  It would be unrealistic, if the first decision were quashed and remade, to expect a decision heralding any increase other than 9%.  Therefore, Air Nelson could acquire no practical benefit from the quashing of the first decision;

(d)Air Nelson knew of the mistaken 20% figure from at least 9 December 2004.  This was “beyond doubt” from 11 March 2005.  From May 2005 it took no steps to have the original decision quashed and refused to pay, simply continuing with the consultation process.  Its application for judicial review was not filed until the start of May 2006.  The delay was therefore “inordinate”. 

[58]     We will make some preliminary comments on the nature of the discretion to decline relief, after which we will consider each of the specific grounds on which Gendall J refused to issue a remedy.

Declining relief

[59]     Public law remedies are discretionary.  In considering whether to exercise its discretion not to quash an unlawful decision or grant another remedy, the court can take into account the needs of good administration, any delay or other disentitling conduct of the claimant, the effect on third parties, the commercial community or industry, and the utility of granting a remedy. 

[60]     Nevertheless, there must be extremely strong reasons to decline to grant relief.  For example, in Berkeley v Secretary of State for the Environment [2001] 2 AC 603 (HL), Lord Bingham of Cornhill described the discretion as being “very narrow” (at 608) whereas Lord Hoffmann said cases in which relief would be declined were “exceptional” (at 616).

[61]     In principle, the starting point is that where a claimant demonstrates that a public decision-maker has erred in the exercise of its power, the claimant is entitled to relief.  The usual assumption is that where there is “substantial prejudice” to the claimant, a remedy should issue: Murdoch v New Zealand Milk Board [1982] 2 NZLR 108 at 122 (HC). This is evident from Unison Networks Ltd v Commerce Commission CA284/05 19 December 2006, where this Court refused to grant relief, notwithstanding a finding that the Commerce Commission had acted unlawfully, on the basis that overturning the Commission’s decision would occasion considerable disruption to the electricity industry and its consumers.  The majority nevertheless took note of “strong cautions against exercising the discretion not to set aside an unlawful decision”: at [81]. 

[62]     We now turn to Gendall J’s specific reasons for refusing to grant relief in respect of the first decision.

Opportunism

[63]     The Judge implicitly said that Air Nelson’s conduct, refusing to pay at the 9% level prior to the second decision, disentitled it from judicial review relief.  We disagree.  Air Nelson was doing nothing more than refusing to pay charges which had not been authorised.  Although other (minor) users of the airport were apparently content to pay, they had much less at stake than Air Nelson, which is the airport’s major user.  In any event, given our conclusions with respect to the validity of the second decision, it can no longer be said that Air Nelson behaved opportunistically so as to justify refusing relief: it merely refused to pay a charge which, in light of our conclusions, was never validly approved by the Minister.

The s 39 argument

[64]     Gendall J concluded that it was open to the Authority to rebate the difference between the 20% increase approved by the first decision and the 9% approved by the second decision under s 39.  He saw that possibility as justifying the refusal to quash the first decision.  The underpinning of that reasoning was the Judge’s conclusion that the second decision was valid, so that the 9% increase was, at least from the time of the second decision, lawful.  Our conclusion that the second decision was invalid leaves open the possibility that the ultimate outcome might be an increase of less than 9% or no increase at all.  We cannot predict what a properly informed Minister will decide.  In those circumstances, the s 39 point loses its significance.  We do not therefore need to determine whether, in fact, a rebate under s 39 was possible and, if so, whether that provided a proper basis for declining relief.

Remedy serving no useful purpose

[65]     Gendall J considered that insofar as the second decision definitively reduced the increase to 9%, no useful purpose would be served by quashing the first decision, especially in light of the Authority’s willingness to seek only a 9% increase not 20% as the first decision authorised.  Once it is clear that the second decision cannot stand, this ground for declining a remedy also falls away.

Delay

[66]     Gendall J considered Air Nelson had delayed inordinately in commencing proceedings.  Such delay, particularly where it causes prejudice to the other party, is a primary ground for refusing relief: Joseph at 1095.

[67]     Mr Gedye argued strongly that Air Nelson did not unreasonably delay the commencement of proceedings: rather it sought to engage with both the Ministry and the Authority with a view to resolving the matter without recourse to litigation.

[68]     Gendall J accepted that any possible delay only started running from 11 March 2005, at which point Air Nelson was officially informed by the Ministry that the landing charges had been increased.  Following this, Air Nelson sought review by the Ministry of the decision.  The outcome of this informal review process was not known until 6 December 2005.  Air Nelson did not learn of the second decision’s existence until 9 January 2006.  Following this it sought disclosure under the Official Information Act and tried to come to a compromise with the Authority.

[69]     In those circumstances, we consider that the date from which the delay should start to run is some time in February 2006, when Official Information Act disclosure was made to Air Nelson.  The following month, Air Nelson’s counsel threatened judicial review proceedings while at the same time seeking a compromise.  When the compromise was refused, the judicial review proceedings were issued.  There was no unreasonable delay and no prejudice to the respondents.  We conclude that there was no proper basis for declining relief on the basis of delay.

[70]     In any event, Gendall J’s evaluation of this issue was undertaken on the basis that he found the second decision was valid, so that the refusal of a remedy deprived Air Nelson of only the benefit of an effective deferral of a 9% increase for a matter of months.  Our finding that the second decision is also invalid means the consequences for Air Nelson are far more substantial, and it would be wrong to subject it to an ongoing obligation to pay increased charges in circumstances where no valid decision to increase those charges has been made.

Conclusion on discretion to decline relief

[71]     For these reasons we conclude that there is no proper basis for exercising the Court’s discretion to refuse relief to Air Nelson.  In relation to the first decision, we conclude that the appropriate course is to quash the decision, and we formally do so.

Remedy with respect to the second decision

[72]     Given our view of the second decision, we turn to the question as to whether we should quash that decision, or simply direct that it be reconsidered without quashing it. 

[73]     Section 4(5) of the Judicature Amendment Act provides that if a court is satisfied that an applicant is entitled to relief pursuant to s 4(1) it may, in addition to or instead of granting relief, direct the decision-maker to reconsider the whole or any part of any matter to which the application for review relates.  We have found that Air Nelson is entitled to relief under s 4(1) (specifically, an order in the nature of certiorari). 

[74]     In Hauraki Catchment Board v Andrews [1987] 1 NZLR 445 (CA), this Court decided that ordering reconsideration without quashing is appropriate to “ensure that a rehearing can take place without any real prejudice resulting to others” (at 458 per Henry J). Similarly in Franz Josef Glacier Guides Ltd v Minister of Conservation HC GRY CP14/98 13 October 1999 Panckhurst J held that where quashing a decision reached in breach of natural justice would be “inequitable” to commercial parties other than the applicant, it was appropriate to order reconsideration of the decision without quashing it: at [55].  Accordingly the situations in which reconsideration should be ordered instead of quashing under s 4(5) are similar to those in which relief can be declined altogether: namely where to grant the judicial review remedy under s 4(1) would bring about unacceptable administrative consequences or inequity to third parties. 

[75]     We are not persuaded that this is an appropriate case to order the Minister to reconsider the second decision without quashing it.  If both the first and second decisions are quashed, the Authority is left in the position of having to charge airlines at the rates set in 1998.  The detriment to the Authority is the loss of the additional revenue which the 9% increase would have provided.  If the Authority is not satisfied that the revenue it gains from charging 1998 prices (with the benefit of higher charges for each landing by Air Nelson’s Q300s, when compared to those for each Saab 340 landing), it can ask the Minister to increase prices.  Any reduction in the Authority’s reserves arising from the loss of the revenue that the 9% increase would have yielded for the period since 1 January 2005 can be factored into the case for a future increase in charges.

[76]     Accordingly we quash the second decision.  

Result

[77]     We allow the appeal.  We quash the decisions of the Minister of Transport of 7 December 2004 and 17 November 2005.

Costs

[78]     The respondents must jointly pay costs to the appellant of $6,000 plus usual disbursements.  This obligation should be shared equally by the respondents.  Costs in the High Court should be dealt with in that Court.

Solicitors:
James Radcliffe, Air New Zealand for Appellant
Crown Law Office, Wellington for First Respondent
Willis Toomey Robinson, Napier for Second Respondent