Commerce Commission v Vector Limited - [2023] NZHC 1075

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2022-404-001495

[2023] NZHC 1075

UNDER the Commerce Act 1986 Parts 4 and 6

BETWEEN

COMMERCE COMMISSION

Plaintiff

AND

VECTOR LIMITED

Defendant

Hearing: 19 April 2023

Appearances:

E J Watt & Z G Mackay for the Plaintiff

S M Hunter KC, S D J Peart & S J Thomson for the Defendant

Judgment:

5 May 2023

JUDGMENT OF TAHANA J

This judgment was delivered by me on 5 May 2023 at 4.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:
Crown Solicitors, Meredith Connell, Wellington Chapman Tripp, Auckland
Stout Street Chambers, Wellington Shortland Chambers, Auckland

COMMERCE COMMISSION v VECTOR LIMITED [2023] NZHC 1075 [5 May 2023]

Introduction

[1] The Commerce Commission (the Commission) claims that Vector Ltd (Vector) has contravened the quality standards prescribed under determinations made under s 52P of the Commerce Act 1985 (the Act) for the 2017 to 2020 (inclusive) assessment periods. Vector admits the contraventions. The parties have agreed a penalty of
$1,158,400.

[2] In Commerce Commission v Aurora Energy Ltd (Aurora) the Court noted that the established approach when a penalty is agreed is for the Court to impose the agreed penalty so long as it falls within an appropriate range that satisfies the objects of the Act and the circumstances of the case.1 The Court noted that this is because of the interests of the parties and the public in promoting a resolution and thereby avoiding costly, time-consuming and uncertain litigation.2

[3] Vector has previously contravened quality standards for the 2015 and 2016 assessment periods. In 2020, Vector was ordered to pay an agreed pecuniary penalty of $3,575,000 in relation to those contraventions.3 This proceeding concerns subsequent contraventions in the 2017 to 2020 assessment periods. The parties agree that it is appropriate that the penalty for the contraventions during these subsequent assessment periods reflects the totality of Vector’s contraventions in the assessment periods from 2015 to 2020. I therefore also need to consider totality and the relevance of the previous pecuniary penalty when determining whether the agreed penalty is within an appropriate range.

Quality standards

[4] Vector is a distributor of electricity. The electricity lines services4 provided by Vector are subject to price-quality regulation set out in Commission determinations

1      Commerce Commission v Aurora Energy Ltd [2020] NZHC 610 at [3].
2      At [3] where the Court referred to for example: Commerce Commission v Alstom Holdings SA [2009] NZCCLR 22 (HC) at [18]; Commerce Commission v Kuehne + Nagel International AG [2014] NZHC 705 at [21]; Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 96, 258 CLR 482 at [46]; and Commerce Commission v First Gas Ltd [2019] NZHC 231 at [3].
3      Commerce Commission v Vector Limited [2019] NZHC 540 (Vector).
4      “Electricity lines services” are defined in s 54C of the Commerce Act 1986 to include “the conveyance of electricity by line in…

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.

Continue reading Commerce Commission v Vector Limited

Details

AGLC: Commerce Commission v Vector Limited [2023] NZHC 1075
Case: [2023] NZHC 1075
Decision Date: 5 May 2023

CaseChat Overview and Summary

The Commerce Commission initiated proceedings against Vector Limited, alleging that Vector had contravened quality standards for electricity distribution services under the Commerce Act 1986 for the assessment periods from 2017 to 2020. Vector admitted the contraventions, and the parties agreed on a penalty of $1,158,400. The primary legal issue was whether this penalty fell within an appropriate range considering the nature and extent of the contraventions, the loss caused, and the circumstances surrounding the contraventions.

The court considered the severity of the contraventions, which peaked in 2018, and noted that a significant proportion of Vector's excess SAIDI and SAIFI was attributable to health and safety initiatives. Despite Vector's efforts to improve its practices, the court found that these efforts were not timely enough to prevent the contraventions. The court also examined Vector's previous contraventions from 2015 to 2016, which resulted in a penalty of $3,575,000. The court held that the penalty for the 2017 to 2020 contraventions should reflect the totality of Vector's conduct over the five-year period, taking into account the mitigating factors and Vector's eventual return to compliance. The court concluded that the agreed penalty, including a 36% discount for mitigating factors, was within an appropriate range and imposed the penalty accordingly.

The court ordered Vector to pay the agreed penalty of $1,158,400 within 20 working days from the date of the judgment, and that costs lie where they fall.

Orders