Commerce Commission v Kuehne + Nagel International AG HC Auckland CIV-2010-404-005479
[2011] NZHC 1725
•23 November 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-005479
UNDER Sections 27, 30 and 80 of the Commerce
Act 1986
BETWEEN COMMERCE COMMISSION Plaintiff/Respondent
ANDKUEHNE + NAGEL INTERNATIONAL AG
Eighth Defendant/Applicant
Hearing: 21 November 2011
Appearances: J B M Smith and F J Cuncannon for Plaintiff/Respondent
I J Thain and D C E Smith for Eighth Defendant/Applicant
Judgment: 23 November 2011 at 3:00 PM
JUDGMENT OF VENNING J APPLICATION FOR LEAVE TO APPEAL
This judgment was delivered by me on 23 November 2011 at 3.00 pm, pursuant to Rule 11.5 of the
High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Meredith Connell, PO Box 2213, Auckland
DLA Phillips Fox, PO Box 160, Auckland
Copy to: JBM Smith, PO Box 117, Wellington
COMMERCE COMMISSION V KUEHNE + NAGEL INTERNATIONAL AG HC AK CIV-2010-404-005479
23 November 2011
Introduction
[1] In a decision delivered on 12 October 2011 this Court set aside Kuehne + Nagel International AG’s (Kuehne + Nagel) protest to jurisdiction in relation to certain of the causes of action pursued by the Commerce Commission against it.
[2] Kuehne + Nagel seek leave to appeal the judgment to the extent that this
Court ruled:
(a) there was a good arguable case that the acts of Kuehne + Nagel Limited (a New Zealand subsidiary) could be attributed to Kuehne + Nagel; and
(b)there was a serious issue to be tried on the merits in respect of causes of action relating to the WRS 2001, United Kingdom NES, Air AMS, Italian SFA and Canadian ACI agreements.
[3] Kuehne + Nagel also applies for a stay. Counsel confirmed they have reached agreement in relation to that issue. The application for stay is adjourned with leave reserved to bring it on on three days’ notice, in the event counsel are unable to agree terms following the delivery of this decision.
Principles
[4] The principles to apply on an application such as the present are settled. They were summarised by the Court of Appeal in Stone v Newman as follows:[1]
[1] Stone v Newman (2002) 16 PRNZ 77 at 83.
[18] In general, the jurisdiction of this Court to hear appeals from interlocutory decisions of the High Court under s66 of the Judicature Act
1908 is unrestricted. Under s24G of the Act, however, an appeal from an interlocutory decision of the High Court on a matter entered on the
Commercial List is only by leave. The exceptional requirement reflects a statutory policy aimed at securing the expeditious completion of the
interlocutory stages of cases entered on the Commercial List in order to
minimise delays in completion of that litigation. In terms of that policy leave to appeal under s24G is granted only where the particular circumstances of a case warrant incurring the delay involved in the hearing and determination of an appeal. A high threshold is generally set in terms of either injustice or real detriment to the party seeking to appeal, if it is not permitted to do so, or of the general or public importance of the question to be raised: Meates v Taylor (1995) 5 PRNZ 524 CA.
[19] In this case Mr Banbrook, for the respondents, argued that the threshold for leave has not been reached. There is however in this case, as Mr Cole emphasises, a well recognised competing principle that a foreign citizen resident abroad is not lightly made subject to what, for him, is a foreign jurisdiction. For this reason and because of the finality of the Court's decision on jurisdiction, which is invariably made at an early stage of a proceeding, we consider both the High Court and this Court should more readily entertain an application for leave to appeal against a Judge's interlocutory decision on a matter in the Commercial List where it concerns a protest as to jurisdiction under Rule 131. This is consistent with the view taken by this Court on granting leave to appeal to the Privy Council to a foreign company, whose protest as to jurisdiction had been dismissed in the leading New Zealand case: Kuwait Asia Bank v National Mutual Life Nominees Limited (Leave) (1989) 5 PRNZ 558. At p559 the Court said:
Where the New Zealand Courts have accepted jurisdiction over a foreigner and considerable sums are at stake we think that it is right that the foreigner should have the fullest available opportunity of contesting the jurisdiction.
We approach the present application for leave to appeal accordingly.
Submissions for the applicant
[5] Mr Thain submitted that the decision on jurisdiction was effectively a final ruling on the substantive rights of Kuehne + Nagel concerning the imposition of jurisdiction over it. Kuehne + Nagel would suffer real detriment if leave to appeal was declined. He submitted that the proposed grounds of appeal gave rise to important questions of law.
Submissions for the respondent
[6] Mr Smith submitted that the decision was not a final ruling on substantive rights. He also submitted that there was no real detriment to Kuehne + Nagel particularly as the proposed appeal did not raise any important questions of law.
The approach to the application
[7] While Mr Thain characterised the decision on jurisdiction as having “substantive” detriment, I prefer Mr Smith’s submission that applications under s 24G fall on a continuum. At the lower end of the scale will be decisions as to ancillary rulings such as adjournments and timetable orders and at the higher end applications which, although interlocutory in nature, may determine or affect the rights or liabilities actually in issue, such as strike-out applications: Opotiki Packing
& Coolstore Ltd v Opotiki Fruitgrowers Co-operative Ltd (in receivership).[2] A
ruling on a challenge to jurisdiction is towards the higher end of the continuum as such decisions may determine or affect the rights or liabilities ultimately in issue. That would certainly have been the case had the application been determined against the plaintiff. If the protest issue had been resolved against the plaintiff and it had sought leave to appeal it would have been difficult to refuse leave. To have refused leave would have caused real detriment to the plaintiff at this preliminary stage of the proceedings.
[2] Opotiki Packing & Coolstore Ltd v Opotiki Fruitgrowers Co-operative Ltd (in receivership) (1998) 12 PRNZ 663 (HC).
[8] Also, the comments of the Court of Appeal in granting leave to appeal in the Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [Leave][3] case are a strong indicator of the Court’s attitude even where the protest has been set aside. While I accept the force of Mr Smith’s submission that the observations of the Court of Appeal in that case may have been made in the context of the relatively new procedures incorporated into the High Court Rules in 1986, the general principle
remains valid, namely that a foreigner should not lightly be subject to the jurisdiction of a domestic Court. That principle was recently reaffirmed by the Supreme Court in Poynter v Commerce Commission.[4] That is not to say that in every case leave will be granted, (it was declined in Stone v Newman), but it confirms the significance of the
matter to the applicant.
[3] Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [Leave] (1989) 3 PRNZ 558 (CA).
[4] Poynter v Commerce Commission [2010] NZSC 38.
[9] So although the decision to set aside the protest to jurisdiction may not quite be at the top of the continuum, the approach in the present case is with respect, properly summarised by the Court of Appeal’s observation that the Court should:[5]
“more readily entertain an application for leave to appeal ... where it
concerns a protest as to jurisdiction”.
[5] Stone v Newman (2002) 16 PRNZ 77 at 83.
[10] It must also be borne in mind that an important rationale behind s 24G is to avoid delay and to facilitate the purpose of the Commercial List, namely the early disposition of cases with a commercial background. That rationale is more readily applicable if the decision in respect of which leave is sought was made on an application towards the lower end of the continuum.
Decision
[11] Against that background I consider whether the applicant can show real detriment or that the appeal raises issues of general or public importance. In the present case there could be real detriment to Kuehne + Nagel, as an overseas company, if it is required to submit to the New Zealand jurisdiction provided that it has a fairly arguable case that it should not otherwise be required to submit to jurisdiction. The detriment lies in facing a claim for substantial sums of money by a publicly funded regulatory authority in a foreign jurisdiction. Kuehne + Nagel would be required to submit to this Court’s jurisdiction, and run its case in New Zealand with the attendant cost, inconvenience and disruption to its business. Even in the event Kuehne + Nagel ultimately succeeded in opposing the claim it would not recover anything like the actual costs it would have incurred. I accept the claim is responsibly brought and at present there is no apparent basis upon which an award of costs above scale would be made if the plaintiff was ultimately unsuccessful. It is therefore not enough to say that any detriment can be addressed by an award of costs to Kuehne + Nagel if it is ultimately successful.
[12] The assessment of how real that detriment is must therefore focus on the merits of the proposed appeal.
[13] The appeal is proposed to be pursued on two principal grounds. First, that there was insufficient evidence to establish a serious issue to be tried on the merits in relation to those agreements which survived Kuehne + Nagel’s challenge to jurisdiction. Second, whether the Court was right to hold that the acts of Kuehne + Nagel Limited could be attributed to Kuehne + Nagel, in particular, whether Kuehne
+ Nagel was engaged in business in New Zealand through its subsidiary Kuehne + Nagel Limited.
[14] In relation to that second point, Mr Thain noted that in the judgment the Court had relied on the admissions by Kuehne + Nagel in a plea agreement made in the United States, noting:
The guilty pleas must have been premised on the basis that Kuehne + Nagel was engaged in the business of providing freight forwarding services.
[15] Mr Thain submitted that, from a policy perspective, there is a risk that the willingness to draw inferences from overseas settlement agreements could act as a fetter on settlement deals both in New Zealand and elsewhere. He submitted that was an important point deserving consideration by the Court of Appeal. With respect, however, I agree with Mr Smith’s response that there is no issue of principle involved and that the extent to which inferences may be drawn in a particular case must depend on the particular circumstances of that case.
[16] Mr Thain also referred to the details of the plea agreement. That has now been put before the Court, by agreement, as an annexure to a fifth affidavit of Mr Chamberlain. Mr Thain referred to a number of passages from the plea agreement which he submitted did not support the above conclusion. The plea agreement records that, had the case gone to trial the United States would have presented evidence sufficient to prove:
(a) (i) ... During the relevant period, [Kuehne + Nagel] was a corporation organized and existing under the laws of Switzerland, with its headquarters in Schindellegi, Switzerland. During the relevant period, [Kuehne + Nagel], through its subsidiaries, provided international air freight forwarding services in the United States and elsewhere and employed 5000 or more individuals.
[17] Rather than detract from the conclusion noted above that admission tends to support the conclusion that Kuehne + Nagel was engaged in the business of freight forwarding through the agency of its subsidiary, a primary finding in the Court’s decision.
[18] However, I accept that whether there was sufficient evidence in relation to the particular agreements to establish a serious issue to be tried on the merits is more arguable. I accept that another Court might take a different view or reach a different conclusion on the facts. While I note Mr Smith’s submissions supporting the findings of fact in this Court, there is force in Mr Thain’s submission that the matter is not straightforward and that as the matter was dealt with on the basis of affidavit evidence another Court could come to a different conclusion on the same facts on one or more of the causes of action. In this context it is relevant that each cause of
action must be considered separately.[6] As the Supreme Court has made clear in
Austin, Nicols & Co Inc v Stichting Lodestar[7] a Court on an appeal in the present circumstances is required to come to its own view on the merits.
[6] Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754.
[7] Austin, Nicols & Co Inc v Stichting Lodestar [2008] 2 NZLR 141.
[19] I accept that whether the facts support the conclusions drawn by this Court, particularly as to the serious issue to be tried in relation to the various agreements involves questions of degree and inference. As Fisher J observed in Opotiki[8] in such a case it seems right that a [party] should usually have one right of independent review.[9] Where the alternative is that the party may be required to submit itself to the jurisdiction of the New Zealand Courts with the attendant detriment that I have identified, that must be particularly so.
Result
[8] Opotiki Packing & Coolstore Ltd v Opotiki Fruitgrowers Co-operative Ltd (in receivership) above n 2.
[9] At 666.
[20] For those reasons, on balance, I conclude that the application for leave ought to be granted in this case.
[21] The issue of delay can be addressed by appropriate conditions relating to the progress of the appeal. It is in the interests of both parties to see the matter of jurisdiction resolved as soon as possible in the Court of Appeal. I invite counsel to settle such conditions by agreement. If they are unable to do so, the Court will settle appropriate conditions. If necessary the conditions can be settled in the context of the leave reserved in relation to the stay application.
Costs
[22] The costs of this application are reserved. They should follow the outcome in the Court of Appeal.
Venning J
0
3
0