ANZ Sky Tours Limited v New Zealand Tourism Board t/a Tourism New Zealand
[2019] NZHC 925
•30 April 2019
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2017-485-944
[2019] NZHC 925
BETWEEN ANZ SKY TOURS LIMITED
Applicant
AND
NEW ZEALAND TOURISM BOARD TRADING AS TOURISM NEW
ZEALAND
Respondent
Hearing: 12 – 13 November 2018 Appearances:
J R Billington QC and L George for the Applicant L Clark and B A Mathers for the Respondent
Judgment:
30 April 2019
JUDGMENT OF CULL J
TABLE OF CONTENTS
Introduction [1]
The issues [5]
Summary [6]
The events leading to Tourism NZ’s recommendation[7]
The Arrowtown incident[11]
The parties’ communications from midnight 14 March 2017[14]
Tourism NZ’s status [24]
The ADS system and the Code of Conduct[25]
Tourism NZ’s response to Donghu’s complaints[34]
Tourism NZ’s decisions [36]
Issue 1 – Are Tourism NZ’s decisions reviewable? [41]
Legal principles[47]
Discussion[53]
Conclusion[60]
Issue 2 – Are there grounds to judicially review the decision? [61] Mistake of fact [64]
Legal principles[66]
Discussion[68]
ANZ SKY TOURS LIMITED v NEW ZEALAND TOURISM BOARD TRADING AS TOURISM NEW ZEALAND [2019] NZHC 925 [30 April 2019]
Conclusion[76]
Breaches of natural justice [78]
Failure to investigate[85]
Failure to consider all facts[99]
Failure to disclose information[111]
Failure to give reasons for revocation[118]
Conclusion[125]
Unreasonableness/Proportionality [129]
Legal principles[131]
Discussion[141]
Conclusion[150]
Issue 3: What remedy, (if any), is appropriate? [151]
Relief [152]
Costs [154]
Introduction
[1] ANZ Sky Tours Limited (Sky Tours) is accredited as an inbound tour operator to conduct tours in New Zealand for Chinese tourists. The accreditation is important to its reputation and commercial standing. It has been marketing and selling New Zealand tourism products and services to Chinese visitors since 2000.1 Since 2006 it has been operating in Australia as well as New Zealand and the South Pacific. Only approved New Zealand inbound tour operators who hold the accreditation can operate tours for Chinese tourists who travel to New Zealand under Approved Destination Status (ADS) visas. Tourism New Zealand (Tourism NZ) manages and oversees the ADS accreditation system. Only 37 tour operators are approved.
[2] In 2017, Tourism NZ recommended to the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE) that Sky Tours’ ADS accreditation be revoked for breaches of the Code of Conduct.2 If its ADS accreditation were revoked, Sky Tours would not be permitted to operate tours for Chinese ADS visa travellers.
[3] Sky Tours claims that Tourism NZ made reviewable errors in the course of making three decisions, when it concluded that Sky Tours was in serious breach of the
1 Sky Tours was incorporated in New Zealand and registered with the Companies Office Register on or about 18 January 2000. From about January 2000, Sky Tours has marketed, promoted and sold a range of New Zealand tourism products and services to the Chinese visitor market. This has included organising grand tours, cruises, educational visits, events, conventions and meetings.
2 Tourism NZ is responsible for administering the ADS scheme, including enforcing the Code of Conduct: China ADS Approved Inbound Tour Operators and Tour Guides.
Code of Conduct and recommended revocation of its ADS accreditation. Sky Tours says these decisions and consequent recommendations are judicially reviewable and should be quashed, and Tourism NZ be directed to reconsider the matters.
[4] Tourism NZ opposes the application for judicial review and raises the preliminary issue of whether its decisions, which they say are preliminary and recommendatory only, are amenable to judicial review.
The issues
[5]The issues raised in this application are:
1.Are Tourism NZ’s decisions reviewable?
2.Are there grounds to judicially review the decisions?
-were there mistakes of fact and did the process breach natural justice; and
-was the decision unreasonable, disproportionate, and/or substantively unfair.3
3.If so, what remedy (if any) is appropriate?
Summary
[6] I have found that the final recommendation decision made by Tourism NZ is reviewable. I have also found that Tourism NZ made reviewable errors in making that decision and recommendation to revoke Sky Tours’ ADS accreditation. Those errors are:
(a)Breaches of natural justice. Tourism NZ failed to investigate and consider all the facts, made mistakes of fact, failed to disclose the original complaints to Sky Tours, and failed to give reasons for its revocation recommendation.
3 Sky Tours initially alleged bias and predetermination, but this was not pursued at the hearing.
(b)Disproportionate penalty. Tourism NZ’s revocation recommendation was disproportionate in the circumstances.
The events leading to Tourism NZ’s recommendation
[7] In late 2016, Sky Tours entered into a commercial relationship with a China- based travel seller, Shanghai Donghu International Travel Agency (Donghu), appointing Sky Tours to act as Donghu’s New Zealand ADS-approved operator. Under the written agreement for services, Sky Tours would, amongst other things, book and arrange New Zealand land tour components for tour groups promoted and booked by Donghu, including travel coaches, accommodation, meals and tour guides. Donghu was required to pay a fee for these services. Up until March 2017, Sky Tours organised and ran 49 successful tours for Donghu.
[8] This case involves tour group 0310D (the tour group). Donghu contracted Sky Tours to be the tour group’s inbound tour operator. Sky Tours was, therefore, the ADS- approved operator arranging and managing the tour.
[9] On 11 March 2017, the tour group arrived in New Zealand for a nine-day tour. The tour included a stop-over in Queenstown, scheduled for three nights from 13 March 2017. Ms Liu was the appointed tour guide to accompany the tour group. Ms Liu was a contractor for Sky Tours and was herself an ADS-approved tour guide. The tour group also travelled with a Chinese speaking tour guide, Ms Wang. Ms Wang travelled with the group to and from China. She was employed by Donghu and is not ADS approved.
[10] On 12 March 2017, the tour group was scheduled to stay at the Kingsgate Hotel in Greymouth. When the group arrived, the hotel did not have any rooms available and Sky Tours had to, and did, arrange alternative accommodation.
The Arrowtown incident
[11] On the afternoon of 13 March 2017, the tour group was scheduled to spend approximately 30 minutes in Arrowtown, with one and a half hours scheduled for the drive back to Queenstown where the group was booked to stay at the Crowne Plaza
Hotel. While the tour group was in Arrowtown, Ms Liu left the group and travelled to Queenstown on the tour bus to check that the Queenstown accommodation was confirmed and available.
[12] Tourism NZ claims Ms Liu did not tell the members of the tour group where she was going or why. Sky Tours claims that Ms Liu was made aware of a problem with the booking at the Crowne Plaza and travelled ahead to Queenstown with the coach and driver to resolve this, advising Ms Wang of her plans. The coach returned to Arrowtown approximately one and a half hours later, without Ms Liu, and picked up the tour group, returning them to Queenstown where the group checked into the Crowne Plaza Hotel for three nights. Ms Liu was not present when the tour group checked in. There were no further scheduled activities for that evening and the tour group did not see Ms Liu again that day.
[13] Following communications between Sky Tours and Donghu overnight, at midday on 14 March 2017 Ms He, the sole director and majority shareholder of Sky Tours, cancelled the tour group’s booking at the Crowne Plaza Hotel. The cancellation arose as part of a commercial dispute between Sky Tours and Donghu. It is the events leading up to and following this cancellation of the accommodation that is at the core of these proceedings.
The parties’ communications from midnight 14 March 2017
[14] Although the commercial relationship between Donghu and Sky Tours was initially positive and successful, in early 2017 it soured, because of disputes over late payments by Donghu and disagreements over tour group and business arrangements made by Sky Tours (the commercial dispute).
[15] At approximately midnight (Sydney time), Donghu and Ms He from Sky Tours exchanged a series of WeChat messages. The communications were prompted by a dispute about the failure of Donghu to pay invoices for Sky Tours services on time, contrary to their contract. The parties then entered into an argument about the conduct
of the tour group’s trip to date. Between 12.23 am and 12.51 am, the following messages were sent:4
Donghu:… based on the current situation, I have to find another inbound operator to finish the rest of the itinerary and I’ll seek compensation from you for the actual costs. …
You had abandoned the tour in Arrowtown for more than 2 hours this afternoon, which the visitors had already questioned us. This is why we have to take action to protect our clients. It’s impossible for us to risk our clients in being abandoned and carry on the rest of the itinerary with you.
Sky Tours: Your tours were abandoned in South Africa is publicly known.
…
The really interesting part of the show is yet to come. A person like you would want to play games (with me)?
…
Donghu: Ok ok, can the tours be run normally? Sky Tours: Impossible
We will take action today to protect our right.
[16] The following sequence of timing of the communications among the parties and Tourism NZ is important to an understanding of the events on 14 March:
Midnight14 March: At or around midnight, Donghu arranged a new tour operator to take over the tour group and booked a day trip for the tour group to Doubtful Sound. After midnight (Sydney time) the above WeChat communications took place between Donghu and Sky Tours where Donghu alleges Sky Tours “abandoned the tour in Arrowtown for more than 2 hours this afternoon” and that it has to take action to “protect our clients”.
3.00 am:Sky Tours tells Ms Liu, the tour guide, to rest in the hotel and arrangements will be made for her to return to Auckland.
7.00 am:The tour group departs on the Doubtful Sound day trip with the replacement tour operator and another coach.
7.06 am:Ms Liu receives a WeChat message from Donghu asking for driver’s details.
4 Translated by Tourism NZ.
7.46 am:Donghu’s tour group leader sends WeChat message to Ms Liu stating “Have you gone yet? We still need to go to Milford Sound”.
7.00-7.50 am: Sky Tours’ coach arrives at Crowne Plaza for the day trip to Milford Sound. Ms Liu is on standby for instructions from Ms He of Sky Tours.
8.11 am:(i) In an email, Donghu advises Tourism NZ that the tour group was “abandoned in Arrowtown” for over 2 hours without the coach or tour guide; that there was a problem with the tour group’s accommodation in Greymouth; and there was a financial disagreement with Sky Tours. Donghu advises it was “worried … Sky Tours would abandon the tour on the way to Milford Sound…[and so] booked with [REDACTED] for a day trip tour to Doubtful Sound. I have to ensure my clients are safe.”5
(ii) Ms Liu receives confirmation from an industry contact that the tour group had boarded a bus to Doubtful Sound at 7.00 am, booked through another tour operator the previous night.
8.14 am:Ms Liu advises Ms He of Sky Tours that she was informed the tour group has changed to another operator.
11.30 am:Ms He calls Tourism NZ and advises that Donghu has changed tour operators to a named operator but is unsure if the name is correct. Tourism NZ says that Sky Tours will need to confirm with Donghu that it intends to change tour operators and an amended itinerary would have to be sent through.
12.00 midday: Ms He cancels the tour group’s hotel bookings at Crowne Plaza.
1.10 pm:In an email, Ms He advises Tourism NZ: “the situation has gone beyond my control. … in the middle of the night, DONGHU informed me that they would not pay me as required and they had change[d] LAND OPERATOR. … [The tour group has] gone with another OPERATOR’s coach. … Actions will be taken within today and tomorrow and I want to inform the Office that we have been forced to do so.”
3.43 pm:In response, Tourism NZ asked Ms He: “Could you confirm with us by writing that the attached group [the tour group] has been cancelled by Shanghai Donghu International Travel Services …? … could you confirm that ANZ Sky Tours remain as the responsible ADS approved inbound operator for this
5 The redaction concerns the name of the replacement tour operator.
group? If not, who is the new responsible ADS approved inbound operator for this group?”
5.16 pm:Ms He to Tourism NZ: The tour group “has changed Operator which was informed by Shanghai Donghu International Travel and this group [has] gone [to] MILFORD without noticing Sky Tours. … We are not sure which Land Operator they are using now. Accordingly, we have cancelled the bookings we made in an attempt to save some money.”
5.26 pm:Tourism NZ to Ms He: “Could you please clarify that you’ve just cancelled the Milford Sound Cruise activity only and remain responsible for conducting the rest of the itinerary.”
6.22 pm:Donghu to Tourism NZ: The tour group “has some big problems. … the tour was abandoned in Arrowtown. … In order to prevent [a] similar situation from happening again, our company came up with a solution that we booked with [REDACTED, another tour operator] for a day trip to Doubtful Sound around midnight this morning! We received an update this morning saying that [Ms Liu] had flown to Auckland! … I have already asked our operator to email [Ms He] and advise that we will pay off the tour fees in accordance with the contract as long as she fulfils the inbound operator’s duties until the tours finish without any complaints!”
8.27 pm:Donghu to Tourism NZ: “… all the visitors’ luggage has disappeared. The visitors were supposed to stay in Crowne Plaza for 3 consecutive nights. All the visitors and the tour leader … are now standing in hotel lobby.”
10.55 pm:Donghu emailed Tourism NZ with a complaint about four issues involving Sky Tours:
(i)the accommodation in Greymouth;
(ii)Ms Liu disappearing on the bus in Arrowtown;
(iii)the change of the Milford day trip; and
(iv)the cancelled Crowne Plaza booking.
“We had asked Lucy early in the morning as to whether she was still guiding the group, but she replied in saying that as we had already found another inbound operator, she would catch an early flight going back to Auckland following [her boss’] instruction!”
“…when the visitors returned to their rooms they discovered that their luggage and belongings [had] all disappeared. We also
reported this to the police … The visitors were very upset and emotional.”
[17] From the above communications, the following facts can be summarised. Unbeknown to Sky Tours, prior to the above WeChat communication after midnight, Donghu had made arrangements with an alternative ADS operator to take over the tour group for a day trip to Doubtful Sound. Donghu did not advise Sky Tours of this arrangement, which it had organised at midnight on 13 March, approximately 15 minutes before the WeChat messaging commenced.
[18] At 8.00 am on 14 March 2017 (the next morning) the tour group was scheduled by Sky Tours to depart for a trip to Milford Sound. However, the tour group had left Crowne Plaza on a different coach at approximately 7.00 am, for a trip to Doubtful Sound with the replacement tour operator. As a result, the tour group did not participate in the day trip to Milford Sound, which was paid for and scheduled by Sky Tours.
[19] At 7.46 am on 14 March, Donghu’s tour guide, Ms Wang, asked Ms Liu, “Have you gone yet? We still need to go to Milford Sound.” At the time of this communication, the tour group had already been seen departing on a different coach with the replacement tour guide to Doubtful Sound. At 8.14 am, Ms Liu confirmed to Ms He of Sky Tours that she had been told by a contact in the industry that the tour group had changed to another tour operator, and the tour group had boarded the bus to Doubtful Sound that morning. Ms Liu was told the bookings were made the previous night.
[20] Meanwhile, at 8.11 am, a representative from Donghu had emailed Tourism NZ complaining about the actions of Sky Tours, including allegations that Sky Tours had “abandoned” the tour group in Arrowtown and that Sky Tours should not be eligible to conduct ADS tours. This was the first of several emails on 14 March from Donghu raising its concerns, which were treated by Tourism NZ as a formal complaint against Sky Tours.
[21] By 11.30 am, when Ms He of Sky Tours called Ms Guo of Tourism NZ to advise that Donghu had changed both itinerary and tour operator from Sky Tours to a
named ADS tour operator, whom she understood was the replacement, Tourism NZ required Sky Tours to confirm with Donghu directly that it intended to change tour operators. If so, an amended itinerary would have to be sent through.
[22] At midday, Ms He of Sky Tours cancelled the tour group’s accommodation booking at the Crowne Plaza, where the group was booked to stay until 15 March. The hotel staff removed the tour group’s luggage from their hotel rooms.
[23] Sky Tours did not confirm with Donghu whether it intended to change tour operators or inform Donghu that the tour group’s accommodation had been cancelled. Nor did Donghu advise Sky Tours that the tour group was going to Doubtful Sound, not Milford Sound, or tell Sky Tours of Donghu’s intention that the tour group remain at the Crowne Plaza Hotel and potentially continue with the Sky Tours tour. When the guests returned on the evening of 14 March, their belongings had been removed from the rooms, and Donghu was required to make alternative arrangements for the tour group that evening.
Tourism NZ’s status
[24] Tourism NZ is the operational arm of the New Zealand Tourism Board (the Board), which was established under the New Zealand Tourism Board Act 1991. The Board is a statutory entity under the Crown Entities Act 2004. Under s 7(2) of the New Zealand Tourism Board Act, its functions are to develop, implement and promote strategies for tourism, advising both the government and the New Zealand tourism industry on those strategies. The Board must also give effect to government policy when directed by the responsible Minister under the Crown Entities Act.6 The object of the Board is to ensure that New Zealand is marketed as a visitor destination to maximise long-term benefits to New Zealand.7
The ADS system and the Code of Conduct
[25] Until the late 1990s the People’s Republic of China did not sanction its citizens travelling outside of Asia for tourism purposes. In 1999, the New Zealand government
6 Crown Entities Act 2004, s 7(1)(a).
7 New Zealand Tourism Board Act 1991, s 6.
signed a Cooperation Arrangement on Tourism Matters (the ADS Arrangement) with the Chinese government through the National Tourism Association of the People’s Republic of China. Under the ADS Arrangement, travel to New Zealand was approved by the Chinese government on the condition that Chinese tourists travelled in organised tours arranged and led by an approved inbound tour operator, referred to in the Code as an ADS approved ITO. In this decision I will refer to an ITO as a tour operator.
[26] Only an ADS-accredited operator can run an ADS tour. Chinese visitors travelling on an ADS tour arrive in New Zealand with a single “ADS visa”, which covers the group as a whole.
[27] In 2007, Tourism NZ published the Code of Conduct: China ADS Approved Inbound Tour Operators and Tour Guides (the Code). The Code was developed by MBIE and Tourism NZ in consultation with members of the New Zealand tourism industry and relevant New Zealand government agencies to implement the ADS Arrangement and to deal effectively with the quality issues affecting the China- inbound tour market.
[28] Section 1.3 requires the provisions of the Code to be interpreted so as to give effect to the purpose set out in s 1.1, which is as follows:
(a)to improve New Zealand’s competitive position in the China outbound tour market and encourage sustainable growth of China inbound tours to New Zealand; and
(b)to prescribe a set of procedures and standards which, if complied with by the ITOs and tour guides, will ensure that Chinese visitors receive a good quality tour experience in New Zealand.
[29] An ADS-approved tour operator must comply with the Code and meet the obligations and standards described at section 4 of the Code:8
(a)the primary obligation is to provide a good quality tour experience for Chinese visitors;
8 Section 4 is set out in full in Appendix I to this judgment.
(b)every ADS-approved operator must, at all times, conduct and administer ADS tours to a high professional standard of service and accountability and must manage the ADS tour groups in a proper and professional manner;
(c)every ADS-approved operator owes a duty of care to the Chinese visitors to ensure they are treated at all times as one would treat a welcome guest in one’s own home and the stay in New Zealand is made as enjoyable as possible;
(d)every ADS-approved operator owes a specific duty of care to ensure the Chinese visitors are kept safe and secure while in New Zealand, not exposed to physical or psychological harm, given full, comprehensive and accurate information in answer to their questions and any complaints about the tour are dealt with promptly and effectively.
[30] The ADS system and Code are managed and monitored by Tourism NZ’s China Market Development Unit. For the purposes of this proceeding, Tourism NZ’s role is limited to:
(a)assessing operators for ADS approval in accordance with ss 2.2 and 2.3 of the Code;
(b)granting ADS approval to operators in accordance with s 2.6 of the Code; and
(c)managing any potential breach of the Code by an operator in accordance with s 8.1 of the Code.
[31] Any ADS approval is issued for a term of 12 months from the date of notification and can be renewed on application.9
[32] Where Tourism NZ becomes aware of a breach or potential breach of the Code, section 8.1 specifies the process it should follow:10
8.1TNZ will deal with a potential breach of the Code by an ADS approved ITO as follows:
a.TNZ will draw the potential breach to the attention of the ADS approved ITO and ask for an explanation as to whether, and if so, why it occurred.
9 Sections 2.10 and 2.11 of the Code.
10 Sections 8.1–8.7 and 8.10 are set out in full in Appendix II.
b.The ADS approved ITO will have 5 working days to provide TNZ with an explanation in writing as to whether and why the potential breach occurred.
c.If TNZ is satisfied with the ADS approved ITO’s explanation, no further action will be taken.
d.If the ADS approved ITO does not provide an explanation in writing or TNZ is not satisfied with the ADS approved ITO’s explanation, TNZ will notify the ADS approved ITO of the breach and the action it proposes to take.
e.The ADS approved ITO will have 10 working days from TNZ's notification to respond to TNZ in writing and show cause;
i.why the asserted breach should not be considered a breach of the Code; and/or
ii.why the proposed action should not be taken.
f.TNZ, having considered any response by the ADS approved ITO under section 8.1(e), may decide:
i.to take no further action;
ii.to require corrective action by the ADS approved ITO to remedy the breach and to prevent the same breach from happening again;
iii.to continue the ADS approved ITO’s ADS approval on probation for a stated period of time and on stated conditions, in which event section 8.6 will apply; or
iv.to proceed with a recommendation for suspension or revocation, in which event section 8.7 will apply;
and will notify the ADS approved ITO of its decision.
[33] Where Tourism NZ decides that the appropriate penalty is suspension or revocation of the operator’s ADS approval status, Tourism NZ cannot suspend or revoke the status unilaterally. It must make a recommendation under section 8.7 of the Code to the Chief Executive of MBIE, who may revoke or suspend the operator’s approval status, or place the operator on conditional probation, or seek further information from Tourism NZ or the operator, or take some other action. MBIE is also responsible for monitoring Tourism NZ.
Tourism NZ’s response to Donghu’s complaints
[34] Following receipt of Donghu’s emails, Tourism NZ treated them as a formal complaint against Donghu. At 11.48 am on 15 March, Tourism NZ emailed Sky Tours an “informal notice” of the potential breaches of sections 4.2, 4.3, 4.4 and 4.26 of the Code in respect of three issues:
(a)the accommodation problem in Greymouth;
(b)Ms Liu’s disappearance in Arrowtown and planned departure to Auckland, leaving the tour group with no approved tour guide; and
(c)the cancellation of the tour group’s Crowne Plaza booking.
[35] There followed significant correspondence between Tourism NZ and Sky Tours, leading to a preliminary assessment of 5 May 2017 which advised Sky Tours of its proposed recommendation of revocation, subject to Sky Tours’ opportunity to show cause why there were no breaches of the Code or the proposed action should not be taken. Subsequently, Tourism NZ made three decisions all recommending revocation of Sky Tours’ ADS status.
Tourism NZ’s decisions
[36] Tourism NZ made three relevant decisions which are the subject of this judicial review.
[37] The first decision was made on 19 June 2017 (the June Decision). In the June Decision, Tourism NZ first decided to recommend to MBIE that Sky Tours’ ADS approval status be revoked. The reasons given by Tourism NZ were:
(a)Sky Tours had misunderstood its obligations under the Code;
(b)Sky Tours had failed to take all reasonable steps to ensure that it complied with the Code;
(c)Sky Tours had failed to take steps to verify that its services, and those of the tour guide, were no longer required by the tour group; and
(d)Sky Tours failed to ensure the tour group were kept safe and secure, were not exposed to harm and were provided with comprehensive information.
[38] The second decision was made on 14 September 2017 (the September Decision) where Tourism NZ maintained its decision to recommend to MBIE that Sky Tours’ ADS approval status be revoked. The September Decision set out the following reasons for recommending revocation:
(a)Sky Tours had demonstrated a significant lack of care;
(b)Sky Tours’ communication, and lack thereof, with Donghu was unsatisfactory;
(c)Sky Tours failed to take steps to verify that it was no longer the operator responsible for the tour group;
(d)it was inappropriate for Sky Tours to blame Donghu or Tourism NZ for its conduct;
(e)Sky Tours had misunderstood its role as an ADS approved operator;
(f)Sky Tours had not taken responsibility for its poor communication and handling of the situation; and
(g)Tourism NZ noted Sky Tours’ argument that this incident was a “one- off” but considered that the conduct was of such a serious nature that it warranted recommending revocation.
[39] The final decision was on 13 October 2017 where Tourism NZ recommended to MBIE that Sky Tours’ ADS approval status be revoked under s 8.7 of the Code (the Recommendation), because Tourism NZ determined that Sky Tours has breached ss 4.2, 4.3 and 4.4 of the Code for the following reasons:
(a)it has not treated the Chinese visitors as one would treat a welcome guest in one’s home (contrary to s 4.3);
(b)it has not ensured that the Chinese visitors’ stay in New Zealand was made as enjoyable as possible (contrary to s 4.3);
(c)it has not kept the visitors safe and secure or provided them with full information (contrary to s 4.4); and
(d)it has not conducted and administered the tour group’s tour to a high professional standard of service and accountability (contrary to s 4.2).
[40] Tourism NZ concluded that revocation was justified because the conduct of Sky Tours was particularly serious: it had the potential to undermine the tour group’s experience, and it breached the Code’s primary purpose to provide a good-quality tour experience for Chinese visitors on ADS tours.
Issue 1 – Are Tourism NZ’s decisions reviewable?
[41] The Judicial Review Procedure Act 2016 provides for judicial review of the exercise of a statutory power, the failure to exercise a statutory power, and the proposed or purported exercise of a statutory power.11 “Statutory power” is defined in s 5 of the Act as a power to do anything that is specified in s 5(2) and conferred by any Act.12
[42] The Code is a “strategy for tourism” and by administering it, Tourism NZ is exercising a power conferred by the New Zealand Tourism Board Act 1991 in relation to the functions of the Tourism NZ Board.13 The parties are in agreement that such actions are an exercise of statutory power and are amenable to review.
[43] While Tourism NZ accepts its decision to recommend revocation of ADS approval is “public in nature” and amenable to review, it submits that the decision is a procedural and preliminary step only, required by the Code. Tourism NZ accepts that preliminary decisions are reviewable, but only where the decision is a “step in the process where the step is capable of altering rights, interests or liabilities.”14 It submits that the preliminary decision in this case does none of those things and therefore the application is premature: the Recommendation decision has not had and cannot have any effect on Sky Tours’ status. Tourism NZ submits the process remaining before MBIE still provides an opportunity for Sky Tours to provide further information before any decision is made that affects its business.
11 Judicial Review Procedure Act 2016, s 3.
12 Judicial Review Procedure Act 2016, s 5(1)(a).
13 New Zealand Tourism Board Act 1991, s 7.
14 Marlborough Aquaculture Limited v Chief Executive, Ministry of Fisheries [2003] NZAR 362 (HC) at [14].
[44] Tourism NZ does accept, however, that this application for review has been filed at a stage of the proceedings which is beyond the initial stage and that the Recommendation report is likely to be influential in the ultimate decision.
[45] Sky Tours submits that Tourism NZ’s finding as to breach of the Code appears to be in the nature of a final decision and falls within the categories of interim decisions that are judicially reviewable, as it will have a substantive impact on Sky Tours’ rights.
[46] The critical issue for determination is whether Sky Tours’ application for judicial review is premature, and therefore not reviewable.
Legal principles
[47] The English and New Zealand authorities caution that the availability of judicial review before a final decision has been made is wholly exceptional and prematurity may provide a discretionary ground for declining review.15 It can occur, however, where the relevant procedure can be viewed as part of the decision itself,16 or where the procedure of decision-making has seriously gone wrong or off the rails at an early stage.17
[48] Both parties placed reliance on the Court of Appeal’s decision in Singh v Chief Executive of the Ministry of Business, Innovation and Employment.18 In Singh, the Court held that preliminary decisions are amenable to judicial review.19 In determining whether a preliminary decision could be reviewed, the Court found the following factors are relevant:20
(a)The nature of the statutory power being exercised.
(b)The stage that has been reached in the relevant statutory process.
15 Board of Airline Representatives New Zealand Inc v Attorney-General HC Wellington CP391/98, 8 December 1998; R v Panel on Takeovers and Mergers, ex parte Guinness Plc [1990] 1 QB 146 (CA) at 178 – 179; Zaoui v Attorney-General (No 2) [2005] 1 NZLR 690 (CA) at [183]; Zhao v New Zealand Law Society [2012] NZHC 2169, [2012] NZAR 894 at [67].
16 Board of Airline Representatives, above n 15; Singh v Chief Executive of the Ministry of Business, Innovation and Employment [2014] NZCA 220, [2014] 3 NZLR 23 at [35]; Marlborough Aquaculture Ltd, above n 14.
17 Guinness, above n 15; Marlborough Aquaculture Ltd, above n 14, at [15].
18 Singh, above 16.
19 Singh, above 16, at [40].
20 At [38].
(c)The extent to which the statutory power exercised is likely to be influential in the ultimate decision.
(d)Whether there are any further opportunities in the statutory process to correct any apparent error including the availability of a right to appeal or seek judicial review of a decision ultimately reached at the conclusion of the statutory process.
[49]The Court further observed that:21
… cases of this type are likely to be exceptional but where it is demonstrated that an error of law or process has occurred which is likely to have a material influence on the final decision, the Court may be prepared to intervene. The cases we have discussed are illustrative of situations falling into this category.
[50] The Court of Appeal in Singh cited with approval Marlborough Aquaculture Limited v Chief Executive, Ministry of Fisheries, where Ronald Young J opined that review was available where procedures at an early stage in a decision-making process have seriously gone off the rails.22 He said:23
… there may be situations where because the procedure of decision-making has seriously gone off the rails at an early stage in the process it is essential that the Court quashed the decision. This will particularly be the case where no form of further consultation with the aggrieved party can cure the defect. An obvious example is overt bias by a decision-maker. If established at a preliminary stage it will probably be fatal to all subsequent decision-making.
[51] Ronald Young J further observed that where the courts have reviewed preliminary decisions, those decisions have often been a “step in a process where the step is capable of altering rights, interest or liabilities.”24 It is this category of reviewable preliminary decisions upon which Sky Tours relies, as Tourism NZ’s recommendation will have substantive impact on Sky Tours’ rights. Ronald Young J accepted that views will differ on what is a “draft” or a “proposed” or a “preliminary” decision, because so much depends upon a clear analysis of the facts.25 He concluded that the “essence seems to be that if the interim decision is to be the final decision… then it will be reviewable.”26
21 At [40].
22 Singh, above 16, at [36], citing Marlborough Aquaculture Ltd, above n 14, at [15].
23 Marlborough Aquaculture Ltd, above n 14, at [15].
24 Marlborough Aquaculture Ltd, above n 14, at [14].
25 At [16].
26 At [16].
[52] Examples of cases where preliminary steps have been reviewable as capable of altering rights include Hot Holdings Pty Ltd v Creasy & Ors,27 and Zhao v New Zealand Law Society.28 In Hot Holdings, the High Court of Australia held that a preliminary assessment and recommendation by a mining warden had a discernible effect upon the Minister’s subsequent exercise of a discretion to grant a mining licence.29 It was therefore reviewable. In Zhao, Kós J referred to both Marlborough Aquaculture Ltd and Hot Holdings in finding that an application for review was not premature when the recommendation from the Standards Committee would be given considerable weight by, and would be influential in, any determination by the Committee.30
Discussion
[53] Under the Code of Conduct, Tourism NZ has the power to investigate breaches of the Code and can exercise its discretion to impose any of the penalties contained in section 8.1(f). These are set out in full in Appendix II. In summary, the range of available penalties are: to take no further action; to require corrective action; to continue on probation on conditions; or to recommend to MBIE the suspension or revocation of an operator’s status. Once Tourism NZ has exercised its discretion to make a recommendation, it is described under the Code as a “decision”.31
[54] Under this framework, Tourism NZ is responsible for undertaking the complaints procedure against ADS tour operators and ADS tour guides. The procedure under the Code requires Tourism NZ to receive complaints about breaches of the Code by an ADS-approved tour operator, drawing the breach to the attention of the operator and asking for an explanation in writing. Tourism NZ must then consider any response from the operator and from there make a decision on the ultimate remedy or penalty.32 The investigation and/or inquiry into the complaint is conducted solely by Tourism NZ, and in making its recommendation to the Chief Executive of MBIE, Tourism NZ is wholly responsible for the complaint process.
27 Hot Holdings Pty Ltd v Creasy & Ors (1996) 134 ALR 469 (HCA).
28 Zhao, above n 15.
29 At 174.
30 At [66].
31 Section 5.16(b)(ii) of the Code.
32 Section 8.1(f) of the Code.
[55] Where Tourism NZ recommends revocation of a tour operator’s ADS approval, section 8.7(b) of the Code prescribes the Chief Executive’s power as follows:
(b) on considering the report and recommendation from TNZ and any response by the ADS approved [tour operator] and having regard to any other relevant matters, the [Chief Executive], MBIE may:
revoke the ADS approval; or
[impose any of the other lesser penalties]; or take some other action;
[56] Tourism NZ submits that Sky Tours still has an opportunity to provide information to the Chief Executive of MBIE to influence the ultimate decision and the Chief Executive has discretion to impose a range of other (and less serious) penalties, including taking no action at all. It submits that the Chief Executive is not under any obligation to accept Tourism NZ’s Recommendation. As an illustration of the extent of the discretion in the Chief Executive, Tourism NZ points to the difference in the wording of the Code relating to revocation of a tour guide’s ADS standing. In that case, the Chief Executive should accept the recommendation unless it is unreasonable or proper process has not been followed.33
[57] As Ronald Young J said in Marlborough Aquaculture Ltd, one of the factors mitigating against finding that an interim decision is not final, and therefore not reviewable, is where it “is subject to change if those affected can convince the decision-maker that it is in error”.34
[58] In comparing the Recommendation report here with the factors applicable to “interim” or “proposed” decisions, the following considerations appear relevant:
(a)Tourism NZ has the responsibility and powers under the Code to undertake the complaint procedure for breaches of the Code, providing the basis for the exercise of the final decision vested in the Chief Executive of MBIE;
33 Section 5.16(b) of the Code.
34 Marlborough Aquaculture Ltd, above n 14, at [16].
(b)the Recommendation report, as acknowledged by Tourism NZ, is likely to be influential in the ultimate decision; and
(c)although the Chief Executive may “seek further information” from Tourism NZ or the tour operator, there are no inquiry powers vested in the Chief Executive of MBIE and there is no provision under the Code for a hearing or similar means for “those affected” to convince the Chief Executive of any errors.
[59] I consider the Recommendation report by Tourism NZ does not fall into the category of “an interim” or “a proposed decision”. For the above reasons, I am satisfied that the “essence” of the Recommendation report is in the nature of a final decision in these circumstances,35 and is reviewable at this stage of the decision- making procedure.
Conclusion
[60] The Recommendation decision of Tourism NZ is reviewable and the application for review is not premature.
Issue 2 – Are there grounds to judicially review the decision?
[61] I turn now to consider whether there are grounds to judicially review Tourism NZ’s Recommendation, such as to warrant the intervention of the Court.
[62] As is common in judicial review proceedings, there is considerable overlap on the grounds pleaded by Sky Tours. The same factual matters are pleaded, with slightly different nuancing in respect of the various claims of review. The claims in the first category include mistakes of fact, the failure to consider relevant considerations, and breaches of natural justice and procedural impropriety. The latter, separately claimed, include inadequate investigation, failure to disclose information and failure to give
35 The Recommendation report will be referred to as the Recommendation decision, as it is the last decision and is the subject of review. The previous decisions are steps in Tourism NZ’s decision- making process, resulting in its Recommendation decision.
reasons for the penalty recommendation. The claims in the second category of unreasonableness, disproportionality, and substantive unfairness also merge.
[63] From a review of the facts and the submissions from both parties, I consider this application falls to be considered under three heads of claim:
(a)Mistake of fact;
(b)Breaches of natural justice; and
(c)Unreasonableness/proportionality.
I will deal with each of them in turn.
Mistake of fact
[64] Sky Tours submits that Tourism NZ made mistakes of fact in determining that it breached the Code and in recommending revocation as the appropriate sanction. Although Sky Tours pleaded six errors of fact, a number of the claims overlap and are more appropriately dealt with as natural justice claims. In my view, there is one relevant claim to be assessed under this ground:
(i) Tourism NZ, based on the 7.46 am WeChat message from Donghu’s team leader to Ms Liu, believed that the tour group departed the Crowne Plaza in Queenstown after the message was sent. Ms Liu had advised Tourism NZ that the tour group had left Crowne Plaza with a different tour operator at approximately 7.00 am on the morning of 14 March 2017, before the Sky Tours-organised bus arrived to take the group to Milford at 7.50am.
[65] Tourism NZ in response says it provided Sky Tours with several opportunities to provide information and address any alleged mistakes of fact in its responses to the June and September Decisions. It says Sky Tours did make comment on its alleged mistakes of fact in these responses and Tourism NZ took these into account.
Legal principles
[66] It is still uncertain whether or in what circumstances mistake of fact is an independent ground of judicial review. As Philip Joseph warns in Constitutional and Administrative Law in New Zealand, the courts have moved cautiously towards developing a mistake of fact doctrine at common law,36 and in Bryson v Three Foot Six Ltd the Supreme Court found that mistake of fact is a manifestation of “error of law” review.37 In doing so, the Supreme Court imposed a stricter review threshold for mistake of fact than had been the practice, observing:38
An ultimate conclusion of a fact-finding body can sometimes be insupportable
– so clearly untenable – as to amount to an error of law: proper application of the law requires a different answer. That will be the position only in the rare case in which there has been, in the well-known words of Lord Radcliffe in Edwards v Bairstow, a state of affairs “in which there is no evidence to support the determination” or “one in which the evidence is inconsistent with and contradictory of the determination” or “one in which the true and only reasonable conclusion contradicts the determination”.
As the Court noted, the applicant “faces a very high hurdle”.39
[67] A decision will only be reviewed on the ground that the decision-maker made a mistake as to an established fact, if that fact played a material part in the decision- maker’s reasoning.40 As the authorities caution, it is not the court’s function to review factual inferences about which differing views may be reasonably held; it is not a mistake to adopt one of two differing, but reasonable, points of view of the facts.41 Consequently, as Joseph observes, the courts retain only a residual jurisdiction over demonstrable errors of fact. Only where “on the totality of the evidence, something has gone wrong or an injustice has been done” will the decision be open to rectification.42
36 Philip A Joseph Constitutional and Administrative Law in New Zealand (4th ed, Brookers Ltd, Wellington, 2014) at 990.
37 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [26].
38 At [26] (footnotes omitted).
39 Bryson, above n 37, at [27].
40 E v Secretary of State for the Home Department [2004] EWCA Civ 49, [2004] 1 QB 1044 at [66]; and Lewis v Wilson and Horton Ltd [2000] 3 NZLR 546 (CA) at [92].
41 New Zealand Fishing Industry Association Inc v Minister of Agriculture & Fisheries [1998] 1 NZLR 544 at 552.
42 Joseph, above n 36, at 993.
Discussion
[68] As explained above,43 Donghu, prior to his 12.23 am WeChat exchange with Ms He, made arrangements at midnight for the tour group to be taken over by an alternative tour provider. This tour provider was also an ADS tour operator, who was asked to take the tour group to Doubtful Sound on the morning of 14 March, not Milford Sound as Sky Tours had organised.
[69] Tourism NZ was advised by emails, as early as 8.11 am on 14 March, that Donghu had changed the group’s itinerary and booked the tour group for an alternative day trip to Doubtful Sound with another ADS tour operator. This was an alteration of the tour group’s itinerary and the contractual arrangement with Sky Tours.
[70] Tourism NZ’s interim decisions and the final Recommendation decision each assert, in its view, that Sky Tours was not entitled to rely on the fact that the tour group did not use the planned Milford Sound activity on 14 March 2017 as confirmation that Sky Tours was no longer responsible for those visitors. In the final Recommendation decision, this phrase is added:
Particularly in light of the communication from Dong Hu to the tour guide that morning.
[71] The above phrase is a reference to the 7.46 am WeChat message from Ms Wang to Ms Liu saying, “Are you still here? We need to go to Milford Sound.” At the time of this message, the evidence shows that the tour group had already left at 7.00 am that day with the replacement tour operator for Doubtful Sound. It appears that Tourism NZ did not investigate the timing of that message, or confirm with Ms Wang, when and why that message was sent before deciding that Sky Tours was not entitled to consider it was no longer responsible, at least for that day, for the tour group. Tourism NZ goes further and says that:
Sky Tours does not appear to have followed up on the group’s indication in the morning that it did want to go to Milford Sound.
43 At [17].
[72] Because of the significance Tourism NZ placed on this communication, it required closer scrutiny and checking. Sky Tours had responded to Tourism NZ on this point, stating that Ms Liu and the coach driver had arrived at the Crowne Plaza at 7.50 am to collect the tour group and were told they had already left with another coach.
[73] That Sky Tours was not available or willing to take the tour group out on 14 March is a mistake of fact. Even in this hearing, Tourism NZ submitted that “[o]n the morning of 14 March 2017, the Tour Group was scheduled to travel on an organised day trip with Sky Tours to Milford Sound. Instead, the Tour Group elected to go to Doubtful Sound, independently of Sky Tours.” This submission overlooks the facts that were known to Tourism NZ by the end of 14 March, that Donghu had deliberately changed the tour operator the previous night and had organised for the tour group to leave at 7.00 am or thereabouts for Doubtful Sound. The “election” by the tour group to go to Doubtful Sound is also inconsistent with Tourism NZ’s reliance on the 7.46 am message in the Recommendation decision, saying that the group wanted to go to Milford Sound. In the circumstances, I uphold Sky Tours’ submission that the 7.46 am WeChat message was disingenuous in these circumstances.
[74] Tourism NZ ought to have ensured that it had the facts correct before making its final Recommendation decision. However, while unfortunate, I do not consider this mistake of fact was material to the decision that Sky Tours was in breach of its duties under the Code. Although the mistaken timing of the messages bolstered Tourism NZ’s view that Sky Tours was not entitled to rely on the group’s change of the 14 March activity as confirmation that it was no longer the responsible tour operator, Tourism NZ came to this view without relying solely on the messages (and their mistaken timing) in both the June and September decisions. It is only in its final Recommendation decision that Tourism NZ added the sentence, “particularly in light of the communication from Dong Hu to the tour guide that morning”.
[75] Tourism NZ had other reasons for concluding Sky Tours was not entitled to rely on the change of plans on 14 March, to confirm it was no longer needed, including Sky Tours’ failure to communicate with Donghu on the 14 March (after the midnight WeChat messages) and its failure to ascertain who was in charge of the tour group following Donghu’s change to the group’s itinerary. The other factor, which was
influential in Tourism NZ’s finding that Sky Tours had breached the Code, was Sky Tours’ unilateral cancellation of the accommodation on 14 March, without further communication or direction.
Conclusion
[76] Applying the legal principles, a mistake of fact amounting to an error of law is a high threshold. A decision will be reviewed only on the ground that the decision- maker made a mistake as to an established fact if that fact played a material part in the decision-maker’s reasoning. I do not consider that on this mistaken fact alone the decision is reviewable.
[77] However, as Randerson J for the Court of Appeal said in Taylor v Chief Executive of the Department of Corrections, “[t]his ground of review may alternatively be put on the basis that the decision-maker must take reasonable steps to ascertain the facts and circumstances relevant to the decision.”44 I will reconsider this aspect of the claim under natural justice principles.
Breaches of natural justice
[78]I now turn to consider the natural justice claims.
[79] In essence, Sky Tours submits three principal natural justice breaches. The first is the failure of Tourism NZ to properly investigate a number of matters. These include:
(a)whether the tour guide, Ms Liu, “abandoned” the tour group in Arrowtown on 13 March 2017 and subsequently failed to establish whether the group required her to guide them any further;
(b)whether the tour group was waiting to be taken to Milford Sound by Sky Tours on the morning of the 14 March 2017, or whether it simply
44 Taylor v Chief Executive of the Dept of Corrections [2015] NZCA 477, [2015] NZAR 1648 at [94].
went to Doubtful Sound with another tour operator as had been organised the night before; and
(c)whether Ms Liu informed Donghu that she had been instructed by Sky Tours to leave to Auckland on 14 March 2017.
[80] The second breach, related to the first, is the failure to consider all of the facts in concluding that Sky Tours had breached its obligations under the Code. This includes Tourism NZ’s assumptions that Donghu would continue to use Sky Tours as the tour operator after the 14 March communications and changes of itinerary and that, even if tour operators had changed, Sky Tours was still able (and required) to comply with the Code and keep all visitor’s “safe and secure”, Tourism NZ’s conclusion that Sky Tours jeopardised the safety of the visitor’s, Sky Tours’ apparent failure to take steps to verify Donhgu’s intention to change tour operators, and Donghu’s role in the events.45
[81] The third is the non-disclosure of Donghu’s complaints, which were not disclosed until an OIA request was made by Sky Tours’ solicitors in July 2017, by which time Tourism NZ had already released its June decision deciding to recommend revocation.46
[82]The fourth is Tourism NZ’s failure to give reasons for revocation.
[83] Tourism NZ submits it has complied with the principles of natural justice and its natural justice obligations under section 8 of the Code. Tourism NZ submits there is no investigative function under the Code. Instead, Tourism NZ must seek information directly from the tour operator suspected of breaching the Code, which it did. It submits it took all reasonable steps to acquaint itself with the relevant information and took that information into account when considering the final decision to recommend revocation. Tourism NZ further submits it provided all relevant information to Sky Tours, setting out the relevant obligations under the Code and notice of what conduct could potentially be in breach.
45 These issues were put forward as mistakes of fact in Sky Tours’ submissions, however it is more appropriate to address them under natural justice breaches.
46 A request under the Official Information Act 1982.
[84] I will deal with the submissions and evidence on natural justice considerations by focussing on:
(i)failure to investigate;
(ii)failure to consider all relevant facts;
(iii)failure to disclose information; and
(iv)failure to give reasons for revocation.
Failure to investigate
[85] Section 8 of the Code requires Tourism NZ to deal with potential breaches of the Code by considering any response by the tour operator under section 8.1(e) before it may decide what action it will take. Sky Tours claims that Tourism NZ did not undertake any investigation or inquiry into the tour leader Ms Wang, the tourists of the tour group, or the other ADS-approved tour operator to cross-check factual conflicts on the events of 13-14 March following Sky Tours’ “explanation” and response. Tourism NZ submits that it does not have an investigative function under the Code. The Code requires only that Tourism NZ “ask for an explanation” from an operator in respect of any breach of the Code and consider its response.47
[86] While there is no strictly investigative direction to Tourism NZ under the Code, it is a principle of natural justice that a decision-maker must investigate sufficiently to be able to correctly decide the matter at hand.48 Section 8 of the Code requires Tourism NZ to deal with potential breaches by considering any response from the tour operator in making its ultimate decision. Where that response raises facts or issues that are in dispute, it can be expected that Tourism NZ will have to investigate, or at least inquire into, the circumstances surrounding those facts, both to fulfil its duties under section
8.1 of the Code and natural justice principles. This does not mean there is a general duty of pro-active investigation on all decision-makers. But if there is a conflict between the evidence supplied by the applicant and the respondent, which may have a bearing on the findings of the decision-maker in relation to the charges or to the
47 Sections 8.1(a) and 8.1(e) of the Code (see Appendix I).
48 Discount Brands Ltd v Northcote Mainstreet Inc [2004] 3 NZLR 619 (CA) at [47].
penalty, the decision-maker may be expected to make further inquiry before reaching a decision.49
[87]I have already canvassed Tourism NZ’s omission to check the timing of the
7.46 am WeChat message from Donghu under mistake of fact.50 Although I found this was not a material mistake of fact so as to amount to an error of law on its own, it is a fact which ought to have been inquired into and clarified before the Recommendation was made.
[88] Sky Tours submit there are two further complaints which deserve consideration: Donghu’s claim that the tour group was “abandoned” in Arrowtown for up to two hours, which Tourism NZ treated as a “formal complaint”, and Ms Liu’s departure to Auckland. These claims need to be assessed against the sequence of events that occurred on the afternoon of 13 March, when the tour group was in Arrowtown, through to the events of 14 March, which culminated in Sky Tours cancelling the tour group’s accommodation at the Crowne Plaza.
[89] Against a backdrop of the commercial dispute between Donghu and Ms He of Sky Tours over late or non-payment by Donghu, the events in Arrowtown on the afternoon of 13 March assume considerable significance. As the background facts and chronology show, there had been a problem with the tour group’s accommodation in Greymouth. Because of a mistake in the accommodation booking, this tour group did not have a booking for the planned accommodation in Greymouth and was moved to alternative, but high standard, accommodation in Punakaiki.
[90] Once the group reached Arrowtown on 13 March, Ms Liu was asked by Sky Tours to check on the accommodation at the Crowne Plaza in Queenstown, to avoid a repeat of the Greymouth occurrence. Ms Liu left the tour leader of the group, Ms Wang, in Arrowtown with the tour group, taking the coach and the coach driver to Queenstown to confirm the group’s accommodation arrangements. Approximately two hours later the coach returned to Arrowtown to pick up the group. Ms Liu stayed
49 Fraser v State Services Commission [1984] 1 NZLR 116 (CA) at 125.
50 At [73].
in Queenstown and the tour group did not see her for the remainder of the evening. This is the basis for Donghu’s assertion that the tour group was “abandoned”.
[91] Nothing had been planned on the itinerary after the group was to return to Queenstown from their visit to Arrowtown. The initial itinerary schedule had the group “sightseeing” in Arrowtown for half an hour and “heading to Queenstown” from
4.30 to 6pm. Ms Liu, in her response to Tourism NZ and in her affidavit evidence, explained that the group had “two hours of free time in Arrowtown” and she used this free time to go to Queenstown to “sort out the hotel issue.” No untoward incident occurred, and the coach took the tour group back to Queenstown as planned.
[92] On any view of the matter, the tour group was with its own tour leader in the latter stages of the Arrowtown to Queenstown leg of the itinerary. The group returned to Queenstown on the designated coach, and there were no scheduled events for that evening. Donghu labelled the incident as the tour group being “abandoned.” This has been accepted by Tourism NZ without further investigation or an assessment of the significance or otherwise of the incident. Mr Yeo, the manager of the China Market Development at Tourism NZ, in his affidavit for this hearing, described the Chinese visitors as “being stranded without a tour guide”, which appears to be a reference to the Arrowtown incident, as the following day the tour group was with the replacement tour guide. This view forms the basis of Tourism NZ’s preliminary assessments, also recorded in the Recommendation decision, that the visitors were “left” without an ADS tour guide on 13 March 2017 in its June and September Decisions. Although it did not form a part of Tourism NZ’s “final assessment” in its Recommendation decision, it forms a part of the background on which Tourism NZ based its decision.
[93] At the very least, clarification needed to be sought about precisely what and who had been abandoned. It is correct, from the facts available, that Ms Liu did not return to Arrowtown on the coach to uplift the tour group and oversee the checking in at the Crowne Plaza on 13 March. However, there is no reference in the Code that a tour guide must be with the group at all times. Even if that were the case, that is a matter that concerns Ms Liu and her conduct as a tour guide under the Code. The tour guide’s conduct and the tour operator’s conduct are dealt with and considered separately under the Code.
[94] The second claim of Donghu was that Ms Liu told Donghu she had been directed by Sky Tours to depart for Auckland on 14 March. This formed the basis of Tourism NZ’s assessment that Sky Tours “was still unable to provide any evidence” that Sky Tours took steps to ensure the visitors were kept safe, secure and not exposed to any harm “before instructing the ADS tour guide to leave the group.”
[95] On the evidence before me, there is no record of a communication between Donghu and Ms Liu on 14 March about Ms Liu’s instruction to fly back to Auckland. It is agreed, however, that Ms Liu did not fly back until 15 March. In her affidavit, Ms Liu deposes that she did not recall receiving any further correspondence from Donghu that morning after the 7.46am WeChat message. She also deposes that she kept in communication with Ms Wang, the tour leader, to assist her in making bookings and ensuring the group had the best possible tour in the circumstances.
[96] Again, Tourism NZ needed to check on the alleged communication from Donghu to Ms Liu before incorporating it in the background of the Recommendation decision as a reliable fact. This purported communication has led Tourism NZ to present a more adverse picture of Sky Tours conduct than is fair.
[97] I consider it is implicit in a complaint procedure that the entity undertaking the complaint process, seeking information and deciding on the penalty, has an inquiry or an investigative function to deal with allegations of breach and evaluate or assess any responses. Natural justice requires that a decision-maker has a duty to know and find essential facts,51 particularly when they are in dispute.52
[98] I am unable to accept Tourism NZ’s submission that there is no investigative function required of them. It is incumbent on Tourism NZ, in undertaking a complaints procedure, to investigate by seeking information, checking the information received, and considering the facts objectively, before making a decision, particularly when the effects of that decision would adversely affect Sky Tours’ commercial reputation and standing. I consider Tourism NZ failed to fulfil its investigative functions in undertaking its complaints procedure.
51 Minister of Conservation v Maori Land Court [2008] NZCA 564, [2009] 3 NZLR 465 at [114].
52 Fraser, above n 49, at 125.
Failure to consider all facts
[99] As Tourism NZ identified in its Recommendation decision, the purposes of sections 4.2, 4.3 and 4.4 of the Code are to ensure that ADS tours are conducted and administered by an ADS-approved tour operator to a high professional standard of service and accountability and managed in a proper and professional manner. Sections
4.3 and 4.4 prescribe a duty of care for an ADS-approved tour operator to ensure that the Chinese visitors are treated as one would treat a guest in one’s own home, that their stay is as enjoyable as possible, that they are kept safe and secure, not exposed to any harm, and are provided with comprehensive information.
[100] Tourism NZ acknowledged the explanation provided by Sky Tours but was not satisfied with its handling of the matter because Sky Tours had not treated the Chinese visitors as one would treat a welcome guest in one’s home, ensured that the visitors’ stay in New Zealand was made as enjoyable as possible, kept the visitors safe and secure, nor given them full information, as provided under sections 4.3 and 4.4 in the Code. Nor did Sky Tours, in Tourism NZ’s view, conduct and administer the ADS tour to a high professional standard of service and accountability as required under section 4.2.
[101] In itemising Sky Tours’ breaches of the Code, Tourism NZ focused on four matters:
(a)Sky Tours’ conduct was “marked for its unsatisfactory communication”. This is a reference to the WeChat exchange between Donghu and Ms He of Sky Tours at 12.16 am, and Ms He’s failure to reassure Donghu that its tourists were not at risk, or to confirm that Donghu was going to make alternative arrangements for the tour group. No further communication was made by Sky Tours with Donghu as to whether Donghu intended to change tour operators for the tour group.
(b)Sky Tours was not entitled to rely on the fact that because the tour group did not undertake the planned activity to Milford Sound with Sky Tours on 14 March, Sky Tours was no longer the tour operator. Tourism NZ relied on the fact of “the communication from Dong Hu to the tour
guide that morning”, which is a reference to the 7.46 am message sent from Ms Wang to Ms Liu.
(c)Sky Tours chose not to seek to clarify or confirm with Donghu whether Donghu intended to change tour operators to establish that the tour group had in fact “abandoned” the tour guide on 14 March 2017 and no longer required her as the group’s tour guide.
(d)Sky Tours cancelled the hotel bookings at midday without attempting to contact Donghu, despite the clear instruction from Tourism NZ that it would need to confirm that Sky Tours was no longer the responsible tour operator for the remainder of the itinerary.
[102] In response to Tourism NZ’s emailed notice of breaches, Sky Tours apologised for the extreme action of removing the group from its accommodation in Queenstown but said that the situation was unbearable because three tours were “abandoned” by Donghu without explanation. This led to unused bookings and cost. Sky Tours also questioned Donghu’s role in the incident, saying that Donghu took advantage of the situation and of Sky Tours.
[103] Tourism NZ responds to the criticism from Sky Tours that it should have considered Donghu’s role in the events by stating that it has no jurisdiction over the Chinese seller Donghu and that it was Sky Tours’ responsibility to contact both Donghu and the other ADS tour operator to confirm who was responsible for the tour group. Having determined that it was not satisfied with the explanations from Sky Tours about its handling of the matter, Tourism NZ expressed its concern that Sky Tours did not take any responsibility for its poor communication and handling of the situation and determined that Sky Tours had breached the Code as set out above. It determined further that it was appropriate to proceed with the recommendation that Sky Tours’ ADS approval status be revoked under section 8.1(f)(iv) of the Code.
[104] By the end of 14 March 2017, Tourism NZ was aware of the following facts: Donghu had changed tour operator and Tourism NZ knew the name of that operator; Donghu’s decision to cancel the tour with Sky Tours to Milford Sound; before the
WeChat communications with Sky Tours after midnight on 14 March, Donghu had already engaged an alternative tour operator for a Doubtful Sound tour; there was no communication from Donghu to Sky Tours about this; and Sky Tours had taken the action of cancelling the accommodation for the tour group.
[105] However, in its Recommendation decision, Tourism NZ did not give adequate consideration to a number of the above facts, or others, including:
(a)Donghu engaged another tour operator;
(b)Donghu changed the tour group’s itinerary by booking a day tour to Doubtful Sound for 14 March and effectively placed the tour group in another ADS-approved tour operator’s hands. In this instance, this was done prior to the WeChat communications with Ms He of Sky Tours just after midnight on 14 March 2017;
(c)The replacement ADS operator was named and known to Tourism NZ, but Tourism NZ took no steps to clarify with this operator how it proposed to comply with its duties under the Code when it uplifted the tour group at 7.00 am on 14 March. The duty of care under section 4.3 of the Code requires “[e]very ADS approved ITO” to ensure that “the Chinese visitors are treated at all times as one would treat a welcome guest in one’s own home”, and their “stay is made as enjoyable as possible for them”. The replacement ADS operator did not seek information from Sky Tours to confirm it was now taking the tour group for the day and was responsible for the group, despite the change in itinerary; and
(d)Importantly, the tour group departed the Crowne Plaza at approximately 7.00 am for Doubtful Sound, before Ms Liu and the coach arrived to take the tour group to Milford and before the 7.46 am WeChat message.
[106] To maintain a consistent approach under the Code, I consider Tourism NZ as the decision maker should have regard to all of the circumstances and the responses from Sky Tours. This would include whether the replacement operator and/or Donghu had contributed to any breach which jeopardised the tour group’s safety, security and enjoyment. Notably, the ADS replacement tour operator had the same obligations and duties under the Code as Sky Tours.
[107] As a result of not considering the other participants in these circumstances, Tourism NZ has effectively focused solely on Sky Tours and its lack of communication, holding it responsible for the breaches of the Code solely.
[108] That said, it is correct that Sky Tours did not attempt to communicate further with Donghu, despite being advised to do so by Tourism NZ, to clarify whether Donghu intended that it remain the tour operator for the group after 14 March. Further, the decision by Ms He to cancel the Crowne Plaza accommodation for the tour group without confirming its position with Donghu was plainly not appropriate and gave rise to an appropriate concern on the part of Tourism NZ.
[109] However, Tourism NZ has failed to look at the whole picture with all of the participants in these series of events that occurred on 13 and 14 March. Tourism NZ has excluded the actions of Donghu on the basis that Tourism NZ has no jurisdiction over the seller and ignored the fact that another ADS-approved operator took over, without notification to Tourism NZ or to Sky Tours. Those facts mean that:
(a)the itinerary and the operator of this tour group were altered, contrary to the Code and not at the hands of Sky Tours;
(b)each tour operator in the changeover was aware of its responsibilities;
(c)there was inadequate communication by all three participants.
[110] These factors also contributed to the visitors on the tour group not being treated as required under the Code and form part of the facts and circumstances that should have been relevant to the decision-maker’s decision.
Failure to disclose information
[111] The next matter under the natural justice considerations is Tourism NZ’s failure to disclose Donghu’s complaints. Tourism NZ did not disclose Donghu’s complaints until an OIA request was made by Sky Tours in July 2017, by which time Tourism NZ had already released its June decision recommending revocation.
[112] Sky Tours submits Tourism NZ is required by the Code to operate in an open and transparent way when investigating potential breaches of the Code. Section 6.1 of the Code obliges Tourism NZ to pass on all complaints about an ADS tour to the ADS approved tour operator as soon as possible after receipt of the complaint to enable the tour operator to resolve the complaint. In failing to disclose Donghu’s complaints until an OIA request was made, and after the June decision had already been made, Sky Tours submits Tourism NZ failed in its disclosure obligations to enable Sky Tours to prepare a proper response.
[113] Tourism NZ submits the Code does not require Tourism NZ to disclose any documents giving rise to a potential breach; it need only inform the tour operator of the substance of the breach to the extent that the tour operator can properly respond.
[114] Natural justice requires that the party undergoing scrutiny has enough information about the case against him or her to have a fair opportunity of correcting or contradicting it.53 Documents themselves may not need to be disclosed if the full substance of their contents is available.54
[115] While Tourism NZ provided the broad overview of the case against Sky Tours, it did not indicate what information it required to make its decision, or that the information supplied by Sky Tours was inadequate. It was not until Sky Tours made an OIA request in July 2017 that Sky Tours became aware of the detail, the language and the context of Donghu’s complaints. And, it says, it was when Tourism NZ filed its statement of defence in these proceedings, that it became apparent that other
53 Royal Australasian College of Surgeons v Phipps [1999] 3 NZLR 1 (CA) at 14.
54 Daganayasi v Minister of Immigration [1980] 2 NZLR 130 (CA) at 145.
evidence (such as the correspondence between Sky Tours and Ms Liu) may have been relevant to Tourism NZ’s considerations.
[116] At the time of the Recommendation decision, Sky Tours was therefore unable to properly correct any mistakes of fact or misunderstandings that had arisen. These issues have largely already been discussed under both mistake of fact and failure to investigate. If full disclosure of the information relied on had been provided to Sky Tours before any decisions had been made, Sky Tours would have had the opportunity to correct those mistakes of fact by supplying emails and messages with corresponding times and dates to paint a more accurate picture of the events, before Tourism NZ had made its Recommendation decision.
[117] Although Tourism NZ identified the thrust of Donghu’s allegations and the alleged breaches of the sections of the Code when it invited a response from Sky Tours, without the detail and context of Donghu’s complaint, Sky Tours was unaware of what documentation would assist. I consider Tourism NZ failed to provide Sky Tours with adequate information to enable Sky Tours to appropriately respond.
Failure to give reasons for revocation
[118] Tourism NZ did not give any reasons in its final Recommendation (or earlier decisions) why the harshest penalty was chosen as opposed to the other options available under section 8.7 of the Code. These other options include suspending ADS approval on terms and conditions, placing Sky Tours on conditional probation, or taking some other action.
[119] Sky Tours submits it is highly unusual that there is no evidence in the record of Tourism NZ’s decision to demonstrate its deliberation process, what has been considered, and what weight has been given to the information provided by Sky Tours. The lack of reasons given for the ultimate penalty makes it difficult for Sky Tours, and MBIE in making a final decision, to assess the chain of logic to support revocation as an outcome over other available outcomes. This, it says, is a failure of Tourism NZ’s natural justice obligations.
[120] Tourism rejects Sky Tours’ submission that there is a presumption of a duty to give reasons in this case, because the decision is a discretionary one.
[121] The authorities on the need to give reasons, particularly in imposing penalties, have led to findings that the decision-maker or tribunal has fallen into error.55 More recently, the Court of Appeal has acknowledged the importance of giving reasons, and accepted there is a growing trend towards a presumptive duty to give reasons and that in some cases, fairness may demand them.56
[122] In an earlier decision of Lewis v Wilson & Horton Ltd, the Court of Appeal confirmed that there was no invariable rule at common law that public body decision- makers must give reasons for their decisions, but said that it is desirable for the following reasons:57
(a)upholding the principles of open justice;
(b)providing protection against decision-makers being wrong, arbitrary or inconsistent; and
(c)providing a basis on which the lawfulness of decisions can be assessed on appeal or review.
[123] I accept that reasons may be abbreviated, and, in some cases, they may be evident without express inference.58 From the Recommendation decision, it is clear that the reasons for the decision were the breaches of the Code (namely 4.2, 4.3 4.4), though it is less clear what actions led to which breaches, or why the outcome of revocation was required. While it may be inferred that Sky Tours’ lack of communication with Donghu to confirm it was no longer the tour operator, and its cancellation of the accommodation, led to breaches of the Code, it is not possible to discern why the outcome was revocation in this instance, instead of a lesser penalty.
55 Patel v Complaints Assessment Committee [2007] NZHC 1172; and J v Auckland Standards Committee 1 [2018] NZHC 2706, [2018] NZAR 1874 at [29].
56 Waikanae Christian Holiday Park Inc v New Zealand Historic Places Trust Maori Heritage Council [2015] NZCA 23, [2015] NZAR 302 at [70].
57 Lewis v Wilson & Horton Ltd [2000] 3 NZLR 546 (CA) at [75]-[82].
58 Waikanae Christian Holiday Park, above n 56, at [73].
[124] In the professional conduct cases, which I consider under proportionality,59 the courts consistently caution that a penalty for misconduct must be a proportionate response and the lesser penalty should be adopted, particularly where the misconduct was a one-off offence. Without reasons given for recommending revocation in the Recommendation report here and contrary to the authorities, it is unclear what considerations were taken into account by Tourism NZ and why the lesser penalties were not considered, or if so, why they were inappropriate.
Conclusion
[125] The decision-maker has a duty to act fairly and all persons materially affected by a decision must be accorded procedural fairness.60 As the Court of Appeal has noted on numerous occasions, the requirements of natural justice are not confined within hard and fast rules but encompass an area of broad principle.61
[126] I consider I am in the same position as Wild J in Shaw v Attorney-General (No 2), where he found the decisions of the Visiting Justice were unlawful.62 It was the combination of factors which, grouped together, constituted breaches of natural justice. As he described it, the unacceptable combination of a number of procedural failures did not demonstrate “fair play in action”.63 The consequences of the decision on an individual often leads to the courts insisting on a stricter compliance with principles of natural justice.64
[127] In this case, while each of the breaches in isolation might survive challenge if viewed separately, the result in combination has led to a procedure where, without reasons, the harshest penalty has been recommended, namely revocation. Putting all those factors in combination, the failures to investigate, to consider all relevant facts,
59 See [129]–[140] of this judgment.
60 Matthew Smith, New Zealand Judicial Review Handbook, (2nd edition, Thomson Reuters, Wellington, 2016) at 785.
61 CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 (CA) at 186; Royal Australasian College of Surgeons v Phipps [1999] 3 NZLR 1 (CA) at 16; and Attorney-General v Bay of Islands Timber Company Ltd [1979] 2 NZLR 511 (CA) at 517.
62 Shaw v Attorney-General (No 2) [2003] NZAR 216 (HC).
63 At [114]. The decision notes that the phrase was first used by Harman LJ in Ridge v Baldwin [1963] 1QB 539, 578. It has often been repeated since, perhaps most famously by Lord Morris in Wiseman v Borneman [1971] AC 297, 309 (HL) and in New Zealand, Furnell v Whangarei High Schools Board [1973] AC 660, 679, [1973] 2 NZLR 705, 718 PC.
64 Murdoch v New Zealand Milk Board [1982] 2 NZLR 108 (HC) at 115.
to disclose information and to give reasons for the penalty, I find that Tourism NZ has acted in breach of the rules of natural justice, in reaching its decision on breach and penalty.
[128] In light of that finding, the other separately-pleaded claims under this head need no further or separate consideration. I now deal with the last ground, which in light of the findings of reviewable errors, is relevant to any reconsideration of Code breaches and penalty.
Unreasonableness/Proportionality
[129] Sky Tours has claimed unreasonableness, substantial unfairness and disproportionality. Although Sky Tours submits the decision to revoke its ADS status approval was unreasonable, irrational and/or substantively unfair, I consider the real issue is whether the penalty of revocation is disproportionate to the conduct, the subject of the complaint.
[130] Tourism NZ submits that Sky Tours has not provided any evidence that the Recommendation made met the requisite standard for unreasonableness. It accepts that it is required to consider all available sanctions and impose the least restrictive sanction which is appropriate in the circumstances. In the Recommendation decision, Tourism NZ explained why it considered that Sky Tours’ breaches were particularly serious and justified recommending revocation. It submits it is implicit from this that Tourism NZ considered that other sanctions were not appropriate given the seriousness of Sky Tours’ breaches.
Legal principles
[131] An unreasonable decision has been described as a decision that is so unreasonable that no sensible person could have made it.65 Something must be overwhelmingly wrong with the decision. Under this ground of review, the standard of review will vary according to its context and often involves the related concepts of
65 Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223 (CA) at 229.
substantive unfairness, proportionality and an “innominate ground”, namely where something has gone so wrong it requires the court to intervene.66
[132] Although there is much discussion in academic texts and cases as to whether each of those concepts are stand-alone grounds of review,67 this case involves a revocation of a tour operator’s ADS accreditation. It is akin to the penalty cases in which the court has used proportionality as a tool to assess whether the penalty outcome is proportionate to the alleged misconduct.
[133] In Conley v Hamilton City Council, the Court of Appeal noted the uncertainty of proportionality as a stand-alone ground of judicial review, but continued to discuss its advantages:68
The practical advantage of the doctrine [of proportionality] is that it is a respectable tool for assessing two categories of cases, namely where something is challenged as being unreasonably oppressive or where there is a distinctly or manifestly improper balancing of relevant considerations.
Commonly three tests are employed where the proportionality doctrine is resorted to:
·a “balancing test” which requires a balancing of the ends which an official decision attempts to achieve against the means employed to achieve them;
·a “necessity test” which requires that where a particular objective can be achieved by more than one of the available means, the least harmful of these means should be adopted to achieve that objective; and
·a “suitability test” which requires authorities to employ means which are appropriate to the accomplishment of a given law, and which are not in themselves incapable of implementation or unlawful.
…
Whether proportionality adds much in a case such as the present may be open to argument. For instance, the very reason something may be thought to be “unreasonable” is precisely that it is disproportionate, but it is at least an aid to clearer analysis.
66 Guinness, above n 15, at 160.
67 For example Joseph, above n 36, at [24.5.2]; and Smith, above n 60, at [61.3].
68 Conley v Hamilton City Council [2007] NZCA 543 at [54]-[55] and [58].
[134] More recently, the High Court in Mihos v Attorney-General entertained applying the proportionality doctrine as a stand-alone ground, however ultimately the Court erred on the side of caution in an area “where our senior academic writers are of different opinion and the House of Lords has declined to commit itself”.69 In other instances, disproportionality has been said to be proof of unreasonableness.70
[135] While the courts have not adopted proportionality as a distinct head of review, the doctrine of proportionality has been applied as a concept or subset of unreasonableness or error of law, particularly in cases where penalties have been imposed. The courts have emphasised that the penalty must have some correlation with, and not be disproportionate to, the gravity of the offence.
[136] In Institute of Chartered Accountants v Bevan, the Court of Appeal found that proportionality had been established to apply in penalty cases:71
We stress that this ruling is made in the particular context of a finding of guilt being made and associated penalties being imposed. We are not entering into the broader question, raised for instance by Lord Diplock as long ago as 1984, whether proportionality is a distinct head of review… Rather, we limit ourselves to the penalty cases… and take comfort from commentary on proportionality which, while recording the controversy about its separate existence, singles out the penalty area as established…
[137] The Court observed further that Tribunals and other disciplinary entities are often acting under legislation and rules, which confer broad powers to make rules and to impose penalties. However, “[t]he powers are not unlimited… [t]hey are to be exercised in a measured way, not capriciously.” 72
[138] In the Supreme Court decision of Morse v Police, in the context of a criminal appeal, Elias CJ said, “[l]ack of proportionality in outcome (more restriction than is necessary to achieve the legitimate outcome of preservation of public order…) is a result that is substantively unreasonable and amounts to an error of law able to be corrected on appeal restricted to point of law”.73
69 Mihos v Attorney-General [2008] NZAR 177 (HC) at [87]-[98].
70 Isaac v Minister of Consumer Affairs [1990] 2 NZLR 606 (HC) at 636.
71 Institute of Chartered Accountants of New Zealand v Bevan [2003] 1 NZLR 154 (CA) at [55].
72 At [67].
73 Morse v Police [2011] NZSC 45, [2012] 2 NZLR 1 at [40].
[139] In the context of cases of professional discipline, the courts have emphasised that the penalty imposed ought not be “altogether excessive and out of proportion to the occasion”, or it can be held invalid.74 Dobson J in McGuire v Ministry of Justice reinforced the importance of proportionality of penalty to the seriousness of the misconduct:75
Penalty decisions in a variety of professional disciplinary contexts have for some time been amenable to review on proportionality grounds. The sequence of decisions made in those contexts lends itself to a proportionality assessment. The decision-maker would generally make a finding on liability before determining the most appropriate penalty from a range of options available. That final component requires a response that is proportionate to the seriousness of the conduct at issue and is amenable to review on the grounds that the option selected was not the most proportionate.
[140] In the professional disciplinary cases, the courts have reinforced that if the purpose of imposing a disciplinary sanction can be achieved short of striking-off, the lesser alternative should be adopted as the proportionate response.76 This applies particularly where the misconduct was a “one-off” or a “first offence”, in which case the lesser penalty should be preferred.77
Discussion
[141] In its Recommendation decision to MBIE, Tourism NZ focused on Sky Tours’ conduct with this tour group exclusively. It disregarded Sky Tours’ previous 18 years in the industry and whether this conduct was repeat behaviour, when it stated:
Sky Tours’ conduct, regardless of whether it reflects a pattern of behaviour, is of a nature serious enough to warrant revocation of its ADS approval. This is conduct that fundamentally undermines the expected role and conduct of an ADS approved ITO.
[142] It is plain from the evidence of Mr Yeo, the manager of the China Market Development Unit at Tourism NZ, that he and the two other members of the Unit
74 Bevan, above n 71, at [53].
75 McGuire v Ministry of Justice [2013] NZHC 894 at [78] (footnotes omitted).
76 Daniels v Complaints Committee 2 of the Wellington District Law Society [2011] 3 NZLR 850 (Full HC) at [22]; and Roberts v Professional Conduct Committee of the Nursing Council [2012] NZHC 3354 at [50].
77 Sorensen v New Zealand Law Society [2013] NZHC 1630 at [43]; and Orlov v New Zealand Lawyers and Conveyancers Disciplinary Tribunal [2014] NZHC 1987, [2015] 2 NZLR 606 at [191].
regarded Sky Tours’ actions as “extremely serious”. This view was formed on the information available to Mr Yeo and the other members of the Unit, including the allegations about Sky Tours. He described the Unit’s reactions as follows:
[22] I cannot recall any other complaint in relation to an ITO that involved Chinese visitors being stranded without a tour guide or being checked out of accommodation without notice and without consent.
[23] In all other cases that I can recall, irrespective of the nature of the breach (or potential breach), the Chinese visitors were unaware of any issue. In the case of Sky Tours, the Chinese visitors were acutely aware that the ITO
had abandoned them and left them without accommodation.
[Emphasis added].
[143] This evidence reinforces the view that I have reached about Tourism NZ’s inadequate assessment of Sky Tours’ conduct. I have already canvassed the extravagant language used to describe the “abandoned in Arrowtown” incident. That incident needed to be placed in context and the conduct of the tour guide needed to be assessed as to whether it was professional or unprofessional in the circumstances.
[144] However, the alleged “abandonment” by the tour guide in Arrowtown on 13 March has morphed, in Mr Yeo’s eyes, into a tour operator that “had abandoned” the tour group on 14 March and “left them without accommodation.” The conflation of the two events, without more, is troubling. The tour guide had not abandoned the tour group on the morning of 14 March. Donghu had unilaterally altered their itinerary and booked them on an alternative day trip with another tour operator. The basis for asserting that the Chinese visitors “were acutely aware that the ITO had abandoned them”, without the context and the circumstances involved, is misleading.
[145] While the findings on Sky Tours’ inadequate communication and its unilateral cancellation of the accommodation were open to Tourism NZ, I consider that the conflation of all of the events of 13 and 14 March, combined with the use of hyperbole to describe the Chinese visitors being “stranded without a tour guide” or “abandoned,” has led Tourism NZ to decide that Sky Tours’ breaches are so serious, that revocation was the only penalty to be imposed.
[146] Mr Yeo confirms that of the 25 breaches or potential breaches of the Code by other ADS tour operators in the year ending June 2017, this case is more serious than any other. Those other 25 breaches involve using a non-ADS approved tour guide, using a non- “BCA” star graded coach, and the use of non-QUALMARK endorsed accommodation for a tour group. It is plain that the facts and circumstances of this case are markedly different. However, as the courts have reinforced, the penalty imposed by a decision-maker should not be excessive or out of proportion to the occasion. A lesser alternative should be adopted as the proportionate response where appropriate. As noted above, this would normally apply where the misconduct was a “one-off” or a “first offence”.78
[147] I consider the recommendation of revocation to be a disproportionate response here, because the full facts and context were not taken into account in the findings on breaches of the Code, nor was there any reference at all in the Recommendation decision to Sky Tours’ 18 years of trading and good reputation in the market without any formal complaint. In any penalty context, those matters are usually considered, as the cases demonstrate above. The fact that this was a first-time breach should have been taken into account by Tourism NZ, before recommending the most extreme or serious penalty. In summary, I consider the following mitigating factors were overlooked by Tourism NZ:
(a)Sky Tours’ good reputation in the market and trading history/relationships of over 18 years;
(b)Sky Tours’ track record of zero complaints whilst being an ADS- approved operator and the “one-off” nature of this particular incident;
(c)the context of the dispute between it and Donghu and the role of the other ADS tour operator; and
(d)the alternative options available to Tourism NZ.
78 See [140] of this judgment.
[148] Sky Tours submits that given “a number of things went wrong” with Tourism NZ’s process, the intervention of this Court is warranted. This is the innominate ground of review, namely, that something has gone wrong of a nature and degree that requires court intervention, as Lord Donaldson framed it in Ex parte Guinness Plc.79 I consider this is a case where in combination, as set out under Issue 2 above, there are reviewable errors that warrant the intervention of the Court.
[149] For completeness, I have not canvassed the claim of substantial unfairness or unreasonableness separately, in light of my assessment that the revocation recommendation is disproportionate in the circumstances.
Conclusion
[150] The recommendation by Tourism NZ that Sky Tours’ ADS approved status should be revoked was a disproportionate response to the facts and circumstances of this case, given the context in which Sky Tours’ conduct occurred and the fact that this was a “first offence” in 18 years of operation. Tourism NZ failed to give consideration to all the facts and context, in relation to its breaches of Code findings and to the range of sanctions available.
Issue 3: What remedy, (if any), is appropriate?
[151] In light of my findings, I can be brief. The remedies proposed by Sky Tours are appropriate here. I am directing Tourism NZ to reconsider the facts in relation to the breaches of the Code and the imposition of any penalties, which will address the reviewable errors canvassed above.
Relief
[152]Sky Tours has succeeded in its application for a grant of relief.
[153]The relief sought by Sky Tours is granted. I make the following orders:
79 Guinness, above n 15, at 160.
(a)the recommendation by Tourism NZ for revocation of Sky Tours ADS approval status is quashed;
(b)Tourism NZ is directed to:
(i)reconsider the alleged breaches of the Code of Conduct for China ADS-approved inbound tour operators and guides; and
(ii)reconsider what penalty (if any) be imposed, having regard to the alternative corrective measures available under the Code of Conduct.
Costs
[154] If counsel are unable to agree on costs within four weeks of the date of this judgment, counsel are to file memoranda.
Cull J
Solicitors:
Anthony Harper, Auckland for the Applicant Kensington Swan, Wellington for the Respondent
APPENDIX I
CODE OF CONDUCT: CHINA ADS APPROVED INBOUND TOUR OPERATORS AND TOUR GUIDES
4OBLIGATIONS OF ADS APPROVED ITOS IN RELATION TO ADS TOURS80
Good Quality Tour Experience
4.1The primary obligation of the ADS approved ITO is to provide a good quality tour experience for the Chinese visitors on the ADS tours which the ADS approved ITO conducts and administers, namely that the ADS tour is satisfactory to the Chinese visitors on the ADS tour in the sense that:
a.the Chinese visitors are provided with:
ia tour in accordance with the itinerary they paid for in the tour price; and
iiattractions, activities, accommodation, meals and transport to the standard they paid for in the tour price; and
b.the itinerary, and the attractions, activities, accommodation, meals and transport provided by the ADS approved ITO meet the reasonable
expectations of the Chinese visitors; and
c.the Chinese visitors leave New Zealand after the end of the ADS tour with a good impression of the tour experience and of the tour arrangements within New Zealand.
d.from 1 October 2013, the itinerary complies with Article 35 of the Tourism Law of the People’s Republic of China, as amended from time to time.
4.2An ADS approved ITO must, at all times, conduct and administer ADS tours to a high professional standard of service and accountability and manage the ADS tour groups in a proper and professional manner.
Duty of Care
4.3Every ADS approved ITO owes a duty of care to the Chinese visitors on each ADS tour to ensure that:
a.the Chinese visitors are treated at all times as one would treat a welcome guest in one’s own home (despite the fact that they have paid for the ADS tour); and
b.the Chinese visitors’ stay in New Zealand is made as enjoyable as possible for them.
4.4Without limiting the generality of section 4.3, every ADS approved ITO owes a specific duty of care to the Chinese visitors on an ADS tour to ensure that they:
a.are kept safe and secure while in New Zealand;
b.are not exposed to, or subjected to, physical or psychological harm;
c.are given full, comprehensive and accurate information in answer to their questions and otherwise; and
d.have any complaints about the ADS tour dealt with promptly and effectively.
80 “ITO” means Inbound Tour Operator. “ADS” means Approved Destination Status.
APPENDIX II
8ADS APPROVED ITO: BREACHES OF THE CODE
8.1TNZ will deal with a potential breach of the Code by an ADS approved ITO as follows:
aTNZ will draw the potential breach to the attention of the ADS approved ITO and ask for an explanation as to whether, and if so, why it occurred.
bThe ADS approved ITO will have 5 working days to provide TNZ with an explanation in writing as to whether and why the potential breach occurred.
cIf TNZ is satisfied with the ADS approved ITO’s explanation, no further action will be taken.
dIf the ADS approved ITO does not provide an explanation in writing or TNZ is not satisfied with the ADS approved ITO’s explanation, TNZ will notify the ADS approved ITO of the breach and the action it proposes to take.
eThe ADS approved ITO will have 10 working days from TNZ’s notification to respond to TNZ in writing and show cause;
iwhy the asserted breach should not be considered a breach of the Code; and/or
iiwhy the proposed action should not be taken.
fTNZ, having considered any response by the ADS approved ITO under section 8.1(e), may decide:
ito take no further action;
iito require corrective action by the ADS approved ITO to remedy the breach and to prevent the same breach from happening again;
iiito continue the ADS approved ITO’s ADS approval on probation for a stated period of time and on stated conditions, in which event section 8.6 will apply; or
ivto proceed with a recommendation for suspension or revocation, in which event section 8.7 will apply;
and will notify the ADS approved ITO of its decision.
Penalties
8.2Where TNZ decides that an ADS approved ITO has breached the Code, it may make a decision on the appropriate action to be taken in accordance with the guideline penalties set out in Appendix 5, which relate to breaches of sections:
a3.3-3.5, 3.7, 3.15-3.16 (in relation to general obligations of ADS approved ITOs); and
b4.5-4.23, 4.26 (in relation to obligations of ADS approved ITOs in relation to ADS tours);
8.3TNZ at its discretion (but acting reasonably) may elect to take actions different to those set out in Appendix 5.
8.4Where TNZ decides that an ADS approved ITO has breached sections of the Code other than those listed at Appendix 5, TNZ will make a decision on the appropriate action to be taken on a case by case basis.
8.5Where TNZ decides that multiple breaches of the Code have occurred in respect of an ADS approved ITO, TNZ will make a decision on the appropriate action to be taken on a case by case basis.
Continuation on Probation
8.6If TNZ decides that the ADS approved ITO’s ADS approval is to be continued on probation:
athe conditions of continuation on probation will be:
ithe ADS approved ITO does not breach the Code again during the stated probation period;
iithe corrective action required by TNZ is implemented, carried out and completed by the ADS approved ITO in accordance with TNZ’s requirement; and/or
iiiany other condition that TNZ considers appropriate.
bif, and for as long as, the ADS approved ITO complies with the conditions of probation, its ADS approval will continue in force.
cif the ADS approved ITO does not comply with the conditions of probation, that will constitute a breach of the Code and:
iTNZ will decide whether to recommend suspension or revocation of its ADS approval and
iithe provisions of section 8.7 will apply.
Suspension, Revocation – Procedure
8.7If TNZ decides to recommend revocation or suspension of the ADS approved ITO’s ADS approval:
aTNZ will make a report and recommendation to CE, MBIE accordingly including, where suspension is recommended, a recommendation as to the conditions and term of the proposed suspension;
bon considering the report and recommendation from TNZ and any response by the ADS approved ITO and having regard to any other relevant matters, the CE, MBIE may:
irevoke the ADS approval; or
ii suspend the ADS approval on stated terms and conditions; or iii place the ADS approved ITO on conditional probation; or
iv seek further information from TNZ and/or the ADS approved ITO; or v take some other action;
and MBIE will use its best endeavours to notify the ADS approved ITO and TNZ of its decision accordingly within 15 working days (excluding any time taken to receive information under 8.7(b)(iv)).
Revocation
8.10From the time when the ADS approved ITO’s ADS approval is revoked:
athe ADS approved ITO must cease conducting and administering ADS tours but:
ithe ADS approved ITO may carry out and complete ADS tours which are either in New Zealand or en route to New Zealand at the time of revocation; and
iiif, at the time of revocation, ADS visas have been granted for a proposed ADS tour to be conducted and administered by the ADS approved ITO, the ADS approved ITO must arrange for that tour to be conducted and administered by another ADS approved ITO.
bFrom the time when its ADS approval is revoked, the ADS approved ITO must not:
iconduct and administer ADS tours; or
iihold itself out to be an ADS approved ITO.
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