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Commerce Commission v Cathay Pacific Airways Ltd

Commerce Commission v Cathay Pacific Airways Ltd

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Case Copied 18 April 2012 15 min read

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2008-404-008357 [2012] NZHC 726

BETWEEN COMMERCE COMMISSION Plaintiff

ANDCATHAY PACIFIC AIRWAYS LTD Defendant

Hearing: 4 April 2012

Counsel: N Flanagan and K Wendt for Plaintiff
I Thain for Defendant

Judgment: 18 April 2012

JUDGMENT OF ASHER J

(Tailored discovery in relation to Cathay Pacific)

This judgment was delivered by me on Wednesday, 18 April 2012 at 1pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:
Meredith Connell, DX CP 24063, Auckland 1140. Email: katerina.wendt@meredithconnell.co.nz
DLA Phillips Fox, DX CP 24027, Auckland 1140. Email: iain.thain@dlapf.com

COMMERCE COMMISSION V CATHAY PACIFIC AIRWAYS LTD HC AK CIV-2008-404-008357 [18 April
2012]

Introduction

[1] In this proceeding the Commerce Commission claims that Cathay Pacific Airways Ltd, along with other airlines, fixed fuel and security surcharges at certain agreed rates. The proceeding is at present part-heard. There has been a stage one hearing which determined that there is a market in New Zealand for air cargo services from an overseas country or region to New Zealand. The parties are now preparing for a stage two hearing which will consider the remaining issues. The core issue to be determined is whether the defendant airlines entered into arrangements to agree on fuel and security surcharge rates. That hearing is set down to begin in February 2013. It may take as long as five months.

[2] Separate proceedings have been issued against each airline. However, the proceedings are all to be heard together, and most issues have been determined between the Commerce Commission and the airlines acting collectively.

[3] The parties have in recent months, in accordance with timetable directions made by consent, been preparing and providing discovery and preparing evidence. This hearing is concerned with aspects of the discovery to be provided by Cathay. The Commission seeks three very specific discovery orders against Cathay. Cathay, which has in common with other airlines agreed most aspects of discovery with the Commission, opposes the making of the three particular orders sought.

The specific issue

[4] The Commission seeks discovery against Cathay in relation to Singapore and the United States in the following three categories:

1. Discovery of documents held by Cathay in Singapore relating to the global and regional agreements to impose and [the] imposition of fuel surcharges on cargo, within the period

(a) 1 November 1999 to 30 April 2000; and
(b) 1 March 2002 to 31 May 2002.

2. Discovery of documents held by Cathay in the United States relating to the global and regional agreements to impose and [the] imposition of

fuel surcharges on cargo, within the period November 1999 to October
2000.

3. Discovery of documents held by Cathay in Singapore relating to the global and regional agreements to impose and [the] imposition of security surcharges on cargo.

[5] Cathay argues that this discovery would be disproportionate and unreasonable. At my request Cathay has put forward its own far more limited proposal as to discovery orders in relation to Singapore and the United…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NZHC 726
Decision Date: 18 April 2012

CaseChat Overview and Summary

The High Court of New Zealand heard a case where the Commerce Commission alleged that Cathay Pacific Airways Ltd, along with other airlines, had engaged in anti-competitive practices by fixing fuel and security surcharges on cargo services. The matter was part-heard, with the court determining that there was a market for air cargo services in New Zealand. The court was tasked with deciding whether Cathay Pacific had entered into agreements with other airlines to fix these surcharges, a matter set for a comprehensive hearing in early 2013. The specific issue before the court was the scope of tailored discovery orders sought by the Commission against Cathay Pacific.

The Commission sought detailed discovery orders from Cathay Pacific concerning documents held in Singapore and the United States related to global and regional agreements on fuel and security surcharges. Cathay Pacific opposed these orders, arguing they would be disproportionate and unreasonable. Cathay Pacific proposed its own more limited discovery orders focusing on specific emails and meetings mentioned in the Commission’s pleadings against other airlines. The court considered whether the Commission's discovery requests were proportionate and relevant to the allegations against Cathay Pacific, weighing the potential relevance and cost of the discovery exercise.

The court found that the Commission's first and second discovery requests were not proportionate. While the documents were relevant, the likelihood of uncovering significant new information was low, given Cathay Pacific's lack of involvement in the specific agreements alleged and the high cost of the discovery process. Conversely, the court ordered the third category of discovery as it related directly to Cathay Pacific's involvement in security surcharge activities in Singapore, where the potential benefit of uncovering relevant documents outweighed the cost.

The court concluded that Cathay Pacific should provide tailored discovery as specified, focusing on emails and meetings directly implicating Cathay Pacific, along with documents relating to global and regional agreements on surcharges. The decision highlighted the importance of proportionality in tailored discovery, balancing the relevance of documents against the burden and cost of the discovery process.

Orders