FoodStuffs (Auckland) Ltd v Commerce Commission HC Auckland CL14/01
[2001] NZHC 563
•27 June 2001
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY CL14/01
COMMERCIAL LIST
BETWEEN: FOODSTUFFS (AUCKLAND) LTD
Plaintiff
AND: COMMERCE COMMISSION
First Defendant
AND PROGRESSIVE ENTERPRISES LTD
Second Defendant
Coram: Williams J
Paterson J
Hearing: 21 June 2001
Judgment: 27 June 2001
Counsel: James Farmer QC with Grant Macdonald and
Mark Williamson for plaintiff
William M Wilson QC with David Laurenson for
Commerce Commission
Lynton Stevens QC with Nicholas F Flanagan for
second defendant
JUDGMENT OF THE COURT DELIVERED BY WILLIAMS J
Issue
[1] The single point in issue in this case is simple to state but difficult to decide.
[2] Pursuant to the Commerce Act 1986 s66 (“the 1986 Act”), companies which propose to acquire the assets or shares in another business may apply to the Commerce Commission for clearance of that acquisition. Until 26 May 2001, pursuant to s 66(3), the Commission was required to apply one test to such applications. Pursuant to the Commerce Amendment Act 2001 (“the 2001 Amendment”) which, so far as this matter is concerned, came into force on 26 May 2001, the Commission is required to apply a different test to such applications. The question for determination in this case is : Which of those tests is to be applied by the Commission to s 66 applications lodged with it prior to 26 May 2001 but undetermined at that date?
[3] The Plaintiff, Foodstuffs (Auckland) Ltd, contends for the 2001 Amendment test. The Second Defendant, Progressive Enterprises, contends for the original s 66 test. Whilst properly adopting a neutral stance and acknowledging that administrative inconvenience must give way to law, the First Defendant, the Commission, has drawn attention to administrative and other difficulties which will result if the 2001 Amendment test is applied both to the remaining undetermined applications and to those which were filed before 26 May but which the Commission has determined since that date in accordance with the original test.
Legislative Background
[4] When the Commerce Act 1975 was repealed by the 1986 Act the transitional provision of the new statute, s111, was aimed at preserving provisions of contracts entered into which might otherwise have breached the terms of various sections of the 1986 Act. There were no express transitional provisions prolonging the terms of the 1975 Act for any purposes, possibly because the 1986 Act was a major departure from previous law.
[5] Section 47 of the 1986 Act read:
“47. Certain acquisitions prohibited
(1) No person shall acquire assets of a business or shares if, as a result of the acquisition,
(a) That person or another person would be, or would be likely to be, in a dominant position in a market; or
(b) That person’s or another person’s dominant position in a market would be, or would be likely to be, strengthened.
(2) For the purposes of this section and section 48 of this Act, where 2 or more persons are interconnected or associated and together are in a dominant position in a market, each of them is deemed to be in a dominant position in that market.
(3) For the purposes of this section and section 48 of this Act, a person is associated with another person if that person is able, whether directly or indirectly, to exert a substantial degree of influence over the activities of the other.
(4) A person is not able to exert a substantial degree of influence over the activities of another person for the purposes of subsection (3) of this section, by reason only of the fact that -
(a) Those persons are in competition in the same market; or
(b) One of them supplies goods or services to the other.”
while the relevant provisions of s 66 read:
“66. Commission may give clearances for business acquisitions-
(1) A person who proposes to acquire assets of a business or shares may give the Commission a notice seeking clearance for the acquisition.
(3) Within 10 working days after the date of registration of the notice, or such longer period as the Commission and the person who gave the notice agree, the Commission shall either-
(a) If it is satisfied that the acquisition will not result in an effect described in paragraph (a) or paragraph(b) of section 47 (1) of this Act, by notice in writing to the person by or on whose behalf the notice was given, give a clearance for the acquisition; or
(b) If it is not satisfied that the acquisition will not result in an effect described in paragraph (a) or paragraph (b) of section 47 (1) of this Act, by notice in writing to the person by or on whose behalf the notice was given, decline to give a clearance for the acquisition.
(4) If the period specified in subsection (3) of this section expires without the Commission having given a clearance for the acquisition and without having given a notice under subsection (3)(b) of this section, the Commission shall be deemed to have declined to give a clearance for the acquisition.
(5) A clearance given under subsection (3) of this section expires-
(a) Twelve months after the date on which it was given; or
(b) In the event of an appeal being made against the determination of the Commission giving the clearance, and the determination being confirmed by the Court, 12 months after the date on which the determination is confirmed.”
[6] For reasons which will become apparent, it is relevant to note that when the original ss47 and 66 (amongst others) were repealed and substituted by the Commerce Amendment Act 1990 (“the 1990 Amendment”) it contained detailed transitional provisions in s48 which relevantly read:
“48. Transitional provisions in relation to mergers and takeovers
(1) Notwithstanding the repeals and amendments effected by this Act,-
(a) The provisions of the principal Act that were in force immediately before the 1st day of January 1991 shall apply in relation to every notice given under section 66 or section 67 of that Act as in force immediately before that date and to every clearance given or authorisation granted in relation to the proposal to which the notice relates as if this Act had not been passed:
(b) Without limiting paragraph (a) of this section, every clearance given and every authorisation granted under section 66 or section 67 of the principal Act as in force immediately before the 1st day of January 1991 or as continued in force by virtue of paragraph (a) of this section is deemed to be a clearance or an authorisation to which section 69 of the principal Act (as inserted by section 23 of this Act) applies.”
[7] The 2001 Amendment was enacted following a fairly lengthy gestation and as part of current Government policy. The thrust is perhaps exemplified in the repeal of the 1986 Act’s Long Title as being an Act “to promote competition and markets within New Zealand” and the substitution of a new s1A which defined the purpose of the 1986 Act as one:
“To promote competition and markets for the long-term benefits of consumers within New Zealand.”
[8] The result may well be to postpone the interests of businesses, their directors and shareholders, to the interests of customers. The explanatory note to the Commerce Amendment Bill (No.2) said that the purpose statement “clarifies that competition is not an end in itself but a means to promote the long-term benefit of consumers and New Zealanders as a whole”.
[9] The explanatory note went on say that the major changes were to bring New Zealand into line with Australian competition law which will “facilitate a more economic approach to defining anti-competitive behaviour”. A number of the provisions of the Bill dealt with general deterrence. The Commission’s investigative and enforcement powers were strengthened.
[10] As far as s11 of the 2001 Amendment, the critical section in this case, is concerned, the explanatory note merely said that the threshold in the new s47 was to be the same as that in the Trade Practices Act 1974 (Cth) s50.
[11] Section 11 of the 2001 Amendment repealed s47 and substituted the following:
“47. Certain acquisitions prohibited
(1) A person must not acquire assets of a business or shares if the acquisition would have, or would be likely to have, the effect of substantially lessening competition in a market.
(2) For the purposes of this section, a reference to a person includes 2 or more persons that are interconnected or associated.
(3) For the purposes of this section, a person is associated with another person if that person is able, whether directly or indirectly, to exert a substantial degree of influence over the activities of the other.
(4) A person is not able to exert a substantial degree of influence over the activities of another person for the purposes of subsection (3) by reason only of the fact that-
(a) those persons are in competition in the same market; or
(b) 1 of them supplies goods or services to the other.”
[12] Since s 11 also repealed s 48, it is immediately apparent that the substituted s47 is effectively identical to the form of the section substituted in the 1990 Amendment apart from the test in subs (1).
[13] Section 11 also amended s66 to substitute the words “have, or would be likely to have, the effect of substantially lessening competition in a market” for the phrase “result in an effect described in paragraph (a) or paragraph (b) of s47(1) of this Act” in subs (3)(a)(b).
[14] The only transitional provision in the 2001 Amendment is s26 which reads:
“26. Provisions as to proceedings already barred and pending proceedings
Nothing in this Act -
(a) enables any proceedings to be brought that were barred before the commencement of this Act; or
(b) affects any proceedings commenced before the commencement of this Act.”
[15] In considering the question in issue, the parties also discussed the provisions of the Interpretation Act 1999, s4(1) (b) of which applies the precepts of the Act to New Zealand statutes unless the “context of the enactment requires a different interpretation”, s5(2) (3) of which entitle the Court in ascertaining the meaning of an enactment from its text and purpose to consider, amongst other things, the headings to Parts and sections and explanatory material and s7 of which provides “an enactment does not have retrospective effect”. The principal sections in contention in this case are ss 17 and 18 which relevantly read:
“17 Effect of repeal generally
(1) The repeal of an enactment does not affect-
(a) The validity, invalidity, effect, or consequences of anything done or suffered:
(b) An existing right, interest, title, immunity, or duty:
. . .
(e) The previous operation of the enactment or anything done or suffered under it.
18 Effect of repeal on enforcement of existing rights -
(1) The repeal of an enactment does not affect the completion of a matter or thing or the bringing or completion of proceedings that relate to an existing right, interest, title, immunity, or duty.
(2) A repealed enactment continues to have effect as if it had not been repealed for the purpose of completing the matter or thing or bringing or completing the proceedings that relate to the existing right, interest, title, immunity, or duty.”
Factual background
[16] The case arises out of Progressive’s application to the Commission for clearance for it to take over Woolworths (NZ) Ltd.
[17] Foodland Associated Ltd, an Australian company which is the ultimate parent of Progressive, had occasional discussions with Woolworths (NZ) from late 1988 first as to the possibility of a joint venture and later by way of sale. Foodland had been aware since before the 1999 New Zealand General Election of the possibility of amendment to the 1986 Act in the event the present Government was elected, and had sought advice on the question of clearance. In early 2000 Foodland commissioned a market analysis concerning a possible acquisition of Woolworths (NZ) supermarkets. The proposition did not proceed at that stage but remained in abeyance until in early March 2000 Foodland agreed to take over an Australian supermarket chain, also owned by the owners of Woolworths (NZ), and then negotiated to buy the latter. Negotiations for Progressive’s purchase of Woolworths (NZ) concluded shortly after 23 May 2001. Progressive’s s66 application was filed on 25 May.
[18] The Commission’s chief investigator responsible for business acquisitions, Mr Borthwick, said in an affidavit that, naturally enough, the Commission was aware of the progress of the 2001 Amendment through Parliament. Its progress created uncertainty for the Commission and the business community as to the precise terms and effect of the amendment, the date it was likely to be enacted and the tests which the Commission intended to apply to applications made before the 2001 Amendment came into force.
[19] The Commission advised inquirers that it intended to apply the original ss47 and 66 test to clearance applications filed with the Commission prior to the 2001 Amendment coming into force but not determined as at that date.
[20] The result was that between 30 March-25 May 2001 the Commission received fourteen clearance applications, more than half its normal annual total. Consequent resource constraints meant that the Commission was unable to process many of those applications within the 10 working days allowed by s66 (3) and had to seek applicants’ agreement to extension. Agreement was forthcoming in all cases. Such agreements have been commonplace during the life of s66 when the Commission has been unable to process clearance applications within the statutory time limit. They avoid the deemed declination which would otherwise follow under s66 (4).
[21] At the time the 2001 Amendment came into force on 26 May there were eleven clearance applications that had been lodged but not determined. By the hearing, clearances had been granted in four. The remainder were still pending with agreed extensions expiring on 21 June or the following day. Mr Wilson, QC, senior counsel for the Commission, advised that though the Commission and applicants were naturally anxious to know the result of their applications, they realistically accepted determinations were unlikely whilst this judgment remained reserved. That was one of the main reasons for the urgency with which thus judgment has been prepared.
[22] To complete that aspect of the matter, Mr Borthwick made the point that if the Court requires these applications to be determined in accordance with the substituted ss 47 and 66, a fresh analytical framework would need to be adopted by the Commission, the Commission’s Business Acquisition Guidelines will need to be amended, new application forms will be required, different information will need to be sought from applicants and the time taken to process applications will need extension to take account of the additional material in light of the changed test. He also made the point that were this Court to require applications lodged before 26 May but undetermined at that date or applications determined between 26 May and the date of hearing to be determined in accordance with the new ss47 and 66, anomalies may arise. Applications filed before 26 May and those filed afterwards will be determined in accordance with different tests. Applications lodged before 26 May and determined since that date may require reconsideration.
Counsel’s submissions
[23] It is convenient to commence this part of the judgment by considering the submissions made on behalf of Progressive by Mr Stevens QC, senior counsel.
[24] Invoking the canons of statutory interpretation against retrospectivity (relying principally on Spiers & Ors v Piako County [1969] NZLR 69 and Accolade Autohire Ltd v Aeromax Ltd [1998] 2 NZLR 15), against interference with economic interests (relying on Entick v Carrington (1765) 19 St Tr 1029; 95 ER 807 and Stewart Investments Ltd v Invercargill City Corporation [1976] 2 NZLR 362) and against interpretations leading to impracticality or absurdity and the presumption that Parliament intended to legislate for a practical and workable result (relying on Holmes v Bradfield Rural District Council [1949] 2 KB 1, 7 and R v Salmond [1992] 3 NZLR 8, 13) Mr Stevens submitted that s26 of the 2001 Amendment did not apply to the issue in this case but that determining of the outstanding clearance applications in accordance with the dominant position test was the correct approach having regard to the Interpretation Act 1999 s18 and, to a lesser extent, s17. He submitted that a clearance application did not come within the term “proceeding” in s26 of the 2001 Amendment but that it was a “matter or thing” under s18 and was not qualified by the closing words of either subsection. He drew attention to the statutory provisions as to the determination of such applications, including Progressive’s power to withdraw an application before determination pursuant to s68 (4).
[25] Alternatively, he submitted that if the closing words of either subsection applied, then Progressive’s clearance application itself qualified as an “interest” because of the statutory procedure which follows lodgement of applications. He submitted the lack of applicable transitional provisions in the 2001 Amendment by contrast with s48 of the 1990 Amendment was irrelevant because, in the meantime, the Law Commission had recommended that provisions similar to the Acts Interpretation Act 1924 s20(g) (h) would be better dealt with by express transitional provisions in the particular statute. Those subsections were to similar effect as s18 of the 1999 statute but concluded with the additional words “if there be no substituted enactment adapted to the completion thereof”. However, it seems that the law draftsman did not accept the Law Commission’s recommendation because the explanatory note to the Interpretation Bill said that cl 18 was drafted because of the “risks that transitional provisions may not always be adequate to cover all the situations that may arise on the repeal of an Act” and that it should “avoid the need for express transitional provisions in particular Acts in many cases”. Mr Stevens submitted that, the 2001 Amendment being silent on the question of transition, the Interpretation Act should apply and suggested that s26 of the 2001 Amendment appeared in the recited form because of a change in limitation periods for penalty proceedings and to ensure proceedings statute-barred at 26 May were not revived.
[26] It was submitted that s66 imposes a duty on the Commission to consider clearance applications in accordance with the statute - although that submission is somewhat circular as begging the question as to which test is to be applied unless the Court holds the answer is sufficiently indicated by the Interpretation Act ss17 and 18.
[27] For Foodstuffs, Mr Farmer QC, senior counsel, made the point that transactions for which clearances are sought are future or conditional transactions (Southern Cross Medical Care Society v Commerce Commission (19/3/2001 HC Auckland CL.29/00 Williams J and Dr Ralph Lattimore para 27 p13) transactions which may never occur so that at least some immunities conferred by clearances are only of potential transactions and may be ineffectual.
[28] Mr Farmer emphasised the fact that proposed acquirers are not compelled to seek clearance. They voluntarily invoke the clearance scheme to obtain not a right but an immunity from challenge for a year from determination. Having amended the law with effect from 26 May, Parliament’s intention should be regarded as being that the amendment should apply to all actions taken after that date. To hold otherwise might frustrate the consumer benefit to which s1A now refers. The administrative inconvenience of changing from one test and one set of forms to another was an inevitable result of virtually any change in the law and was one which would have to be faced in any case for clearances sought after 26 May. Those who had sought to “beat” the Amendment by filing clearance applications prior to the operative date were seeking to advantage themselves. Any advantage obtained by those who obtained clearance before 26 May but did not effect their acquisitions until afterwards was an inevitable result of the 2001 Amendment, but that provided no justification to interpret the statute as Progressive sought.
[29] Mr Farmer submitted that if Progressive’s clearance application and the others filed before 26 May and remaining undetermined were to be decided in accordance with the law operative prior to 26 May, the acquisition of Woolworths NZ and the other forecast transactions may be cleared and achieve immunity when, if the substantial lessening of competition test were to apply, clearance may be denied and the transactions thus be open to challenge. This, it was submitted, was plainly contrary to Parliamentary policy as appearing in the 2001 Amendment.
[30] Mr Farmer firmly submitted that as a result of the 2001 Amendment the terms of s26 post 26 May were clear and required determinations by the Commission after that date to be in accordance with the law then in force, the 2001 Amendment. For determinations to be made after 26 May in accordance with the test applying before that date would be to defeat the policy of the 2001 Amendment and the purpose of the Act.
[31] Progressive and the other applicants in similar positions had, Mr Farmer submitted, no right to a clearance but only to have their applications approved or declined in due course or by force of statute in accordance with the statutory scheme in force at the date of determination.
[32] It was submitted that the 2001 Amendment was not retroactive. It did not affect existing rights retrospectively. It merely altered the test as to prospective effect (L’Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd [1994] 1 AC 486) and there was nothing unfair about deciding that the 2001 Amendment was not retrospective (Accolade (supra) at 18).
[33] It was submitted that Foodstuffs’ application, having only been filed on 25 May, could not be determined before the 2001 Amendment came into force and was not then due for determination. For determinations made after 26 May to be in accordance with the statutory amendments coming into force on that day would apply the law prospectively not retrospectively.
[34] Relying on Director of Public Works v Ho Po Sang [1961] AC 901 Mr Farmer submitted that the Commission’s statutory functions were not an investigation of an existing right which existed independently but were an enquiry by the Commission as an investigative body as to the effect of a forecast acquisition and the conferring by the Commission of immunity from punitive action if the competitive effects were found not to transgress the amended ss47 and 66. A clearance application triggered no more than the right to the statutory investigation. The determination conferred an immunity from impugnment, not the preservation of an existing right.
[35] With reference to the Interpretation Act 1999, Mr Farmer submitted that the terms of the 2001 Amendment were clear and, in accordance with s4, ss17 and 18 had no operation in this case.
[36] Mr Farmer submitted that there was ambiguity as to whether the phrase “existing right interest title immunity or duty” in s18 applied to a “matter or thing” or only to the “bringing or completion of proceedings”. Grammatically, it was submitted, the concluding words must apply to both aspects of s18(1). Such interpretation was consistent with the heading.
[37] Mr Farmer also submitted that the determination of clearance applications does not fall within the phrase “bringing or completion of proceedings” in s18. Although he accepted that a clearance application was a “matter or thing” under s18 he submitted that clearance applicants have no “existing right” under s17(b) and s18. All they have is a right to have their applications determined in accordance with the law in force at the date of determination.
[38] Mr Farmer agreed with Mr Stevens that clearance applications are not “proceedings” within s26 of the 2001 Amendment. He drew particular attention to the detailed transitional provisions in s48 of the 1990 Amendment by contrast with s26.
[39] Whilst remaining neutral, the Commission’s view, as put by Mr Wilson, was that it was obliged by ss 17 and 18 of the Interpretation Act to apply the pre-26 May test to these applications, partly as an aspect of statutory interpretation and partly through the operation of the presumption against retrospectivity.
Discussion
[40] It is convenient to discuss the issue in this case in three sections:
• the words of the statutes
• the canons of statutory interpretation
• policy
The words of the Statutes
[41] There can be little doubt that the 2001 Amendment contains no guidance relative to the issue in this case.
[42] It would have been helpful had Parliament included transitional provisions in the 2001 Amendment making the position in relation to lodged but undetermined applications clear as it did in 1990 but it decided not to follow that course.
[43] There is nothing in the re-enacted ss47 and 66 bearing on whether clearance applications undetermined at 26 May should be determined in accordance with the new or former tests. The only section dealing with transitional matters is s 26 and, whilst the word “proceedings” is a word of wide meaning in statutes, the common thread is the involvement of Courts (Stroud’s Judicial Dictionary 6th ed 2000 vol 2 p 2060; Words and Phrases Legally Defined 3rd ed 1989 vol 3 p 429; New Zealand Legal Words and Phrases p 242). The Court agrees with counsel that s26 does not assist with determining the question in issue in this case.
[44] The statutory scheme enables prospective acquirers who wish to seek statutory immunity from attack of prospective acquisitions to file clearance applications. It is then for the Commission to investigate the matter and determine whether or not clearance should be given. If it is unable to reach a determination within 10 working days (or within any agreed extension) clearance is deemed to be declined. Other than the right to abandon the application, an applicant has no more control over the Commission’s determination than does a litigant in court proceedings. In Court proceedings, if the law changes between commencement and adjudication - as, for instance, by the delivery of authoritative precedent or statutory amendment - the Court’s decision must be in accordance with the law in force at the time of the decision, unless there is some legal requirement to decide the case in accordance with former law.
[45] The same applies to clearance applications.
[46] It therefore follows that clearance applications undetermined on 26 May must be determined in accordance with the 2001 Amendment unless there is any statutory requirement to determine those applications in accordance with the law in force before 26 May.
[47] In this Court’s view, the only statutory provisions conceivably requiring the Commission to apply the pre-26 May test to determinations reached post-26 May, are ss 17 and 18 of the Interpretation Act.
[48] The initial question under s 18 is whether the concluding words “that relate to an existing right, interest, title, immunity, or duty” limit only the phrase “the bringing or completion of proceedings” or apply to the preceding phrase “the completion of a matter or thing”.
[49] Prof Burrows and Mr Fogarty QC, presenters of the NZLS Seminar “Statutory Interpretation” (April 2001 p 33) say of s 18 that:
“This replaces s 20(g) of the 1924 Act and perpetuates an uncertainty which had always attached to that section as well. The ambiguity consists in whether the words “does not affect the completion of a matter or thing” is confined to matters or things which relate to an existing right, interest, title, immunity or duty. If it is thus confined, it will not help one who has embarked on a course of conduct which is not based on an enforceable right, say a statutory commission of inquiry which is half completed when the Act authorising it is repealed.”
[50] For the reasons later discussed, this Court takes the view that in this case the result is the same whether the earlier part of s18 (1) and (2) is regarded as ending at “matter or thing” or whether those sections are regarded as dealing with “the completion of a matter or thing [which] relate[s] to an existing right, interest, title, immunity, or duty”.
[51] The first reason for taking that view is that syntactically, interpretatively and practically, it would be difficult to limit the ambit of s18 (1) if it were to be regarded as saying that “the repeal of an enactment does not affect the completion of a matter or thing” but with the balance of the section then providing a second field of operation. Seen in that light, the earlier part of s18 (1) would have a very broad application. It would only be limited by the word “completion”. It is not difficult to envisage situations where it would be asserted that the necessity for it to be a “matter or thing” being completed would not greatly limit the operation of the section. Such an interpretation might well undermine the effect of repeal.
[52] There seems little reason to read s18 (1) in that way.
[53] This Court takes the view that Parliament must be taken to have intended that the “completion of a matter or thing” left unaffected by repeal should not be as broadly based as earlier discussed and should be linked to and limited by “an existing right, interest, title, immunity or duty”. That is to say, Parliament intended that s18 (1) be construed as if it read “in relation to an existing right, interest, title, immunity or duty, the repeal of an enactment does not affect the completion of a matter or thing relating to such or the bringing of completion of proceedings that relate to such” with subs (2) being construed similarly. Such an interpretation also seems consonant with the heading which makes clear that the section focuses on the effect of repeal on existing rights and on their enforcement by the means set out in the section, namely the completion of related matters or things or the bringing or completion of proceedings concerning such rights and their enforcement. That approach is also consistent with long-standing precedent.
[54] Seen in that light, the operation of s18 (1) in this case is to ensure that the repeal of the former s47 and the amendment of s66 were not to affect the completion of a matter or thing. The next question therefore becomes whether clearance applications undetermined at 26 May were a “matter or thing”.
[55] In that regard, as we understood Mr Farmer’s submissions, he accepted that clearance applications came within the phrase “matter or thing”. In any event, in Spiers (supra at 75) Speight J observed of the phrase “any act matter or thing” in s20(g) of the Acts Interpretation Act 1924 that they were “wide words” and in Comptroller of Customs v McHannigan (25/9/97 HC Auckland M.697/97) Salmon J, after expressing surprise that the words “act matter or thing” had not been judicially interpreted in New Zealand, opted (pp 7-8) for dictionary definitions of those terms. It is unnecessary to recount those definitions of what are such commonplace words. It is sufficient to note that Parliament could scarcely have chosen broader terms than “matter or thing”.
[56] It is correct, as Mr Farmer pointed out, that s20(g) differed materially from the comparable s18 in including the phrase “if there be no substituted enactments adapted to the completion thereof” at the end but, even so, this Court takes the view that those additional words do not affect the correct interpretation in this case and that clearance applications come within the phrase “matter or thing” in s18(1).
[57] The next question is accordingly whether completion of the clearance applications relates to an “existing right, interest, title, immunity, or duty”. It was accepted that no question of title was involved.
[58] As earlier noted, Mr Stevens submitted that Progressive had an “interest” in the completion of its application such as to bring it within s18(1) though counsel for Progressive had been unable to locate a case in point. That notwithstanding, Mr Stevens relied on dictionary definitions and on what has been held to constitute a sufficient “interest” to give standing in judicial review proceedings.
[59] In the Court’s view, in the context of s18 with its emphasis on enforcement and having regard to the placement of the word “interest”, the term is intended, at least for the purposes of this case, to denote an enforceable interest in completion of the clearance applications. And since, subject to withdrawal or to deemed declination, the Commission has no discretion in the matter but must process a clearance application to determination one way or the other this Court takes the view that Progressive has a sufficient “interest” to enforce the completion of its application in the event that it needed so to do.
[60] For the sake of completeness, we record that we take the view that, if “existing” applies to all the words in s 18(1) after the word “right”, we also take the view that applicants for clearance applications undetermined as at 26 May have an “existing . . . interest” in and ability to enforce completion of that process.
[61] During the hearing, submissions on whether applicants for undetermined clearance applications could be said to have an “existing right” verged on the Hohfeldian. Mr Farmer submitted, as earlier recorded, that applicants did not have an “existing right”. Apart from the fact that applicants are unable to influence the Commission’s decision other than by providing such information as it requires, Mr Farmer submitted that granting a clearance is in effect no more than a Commission opinion which binds it for twelve months. All applicants have, he submitted, is a right to have their applications determined in accordance with law and the law was that in force at the date of the determination, not that of the application.
[62] With respect to counsel, we find ourselves unable to accept that submission.
[63] An applicant for clearance has, in our view, an “existing right” to have that application determined by the Commission. As noted, the Commission has no discretion in the matter. It is bound, once an application is received, to proceed to determine it within the statutory time limits and in accordance with the statutory test. If the Commission decides that it is satisfied that the proposed acquisition will not infringe the Act, the clearance which it gives, if the acquisition proceeds, is more than an opinion: it confers both a statutory immunity on the applicant from impugnment of that transaction for a twelve month period and a consequent disability on all other persons, including competitors and the Commission, from the exercise of any powers under the Act in relation to that transaction for that period.
[64] Seen in that light, completion of clearance applications undetermined on 26 May relates to an existing right which can result in an immunity.
[65] However, given that conferment of the immunity is only one of the three possible outcomes - immunity, declination or withdrawal - and only arises at determination, again for completeness it should be noted that in our view it could not be said that the adjective “existing” applies to the word “immunity” in s18.
[66] Our finding that completion of clearance applications outstanding on 26 May relates to an existing right, however, does not address the question as to whether the law applicable to those determinations shall be that in force before or after 26 May. The answer to that question lies in s18 (2). It expressly continues a repealed enactment in effect for the purpose of completing a matter or thing which relates to an existing right.
[67] On that basis, completion of clearance applications undetermined on 26 May comes within s18 (1) in that the section says the repeal of the former ss47 and 66 is not to affect the completion of a matter or thing which relates to an existing right, that is to say, the right to have that application determined by the Commission in accordance with law. The law to be applied to that completion is, pursuant to s18 (2), that in the repealed ss47 and 66 because those sections continue to have effect as if they had not been repealed for the purpose of completing that matter or thing relating to that existing right.
[68] As a matter of statutory interpretation, therefore, in our view all eleven applicants whose clearance applications were undetermined by the Commission on 26 May are entitled to have those applications determined in accordance with the test set out in the law as it existed prior to the coming into force of the 2001 Amendment.
[69] In our view, that approach is also consonant with s17. By our finding, we have reached the view that the repeal of the former ss47 and 66 does not affect the validity (or invalidity if the applications are declined by the Commission or by force of statute) or the effect or consequences of the filing of the clearance applications. Similarly, the repeal of those sections does not affect any existing right or interest or the previous operation of ss47 and 66 or anything, namely the applications, filed under them.
[70] As will be seen, that finding, reached as a result of statutory interpretation, is also consistent with precedent.
Canons of statutory interpretation
Presumptions against retrospectivity:
[71] There are, of course, many authorities to the effect that one of the canons of statutory interpretation is that there is a presumption against a statute having retroactive effect unless it clearly expresses itself so to operate. However, retrospectivity is a term which has not always been consistently used. The nature of the concept, as described in 44 (1) Hals Laws (4th ed re-issue (1995) para 1284 p765) is:
“The effect of an enactment is said to be retrospective when (1) it changes the relevant law with effect from a time earlier than the enactment’s commencement; or (2) it otherwise alters the legal incidents of a transaction or other conduct effected before its commencement; or (3) it confers on any person a power to act with retrospective effect. An enactment is not retrospective, however, merely because a part of the requisites for its action is drawn from a time before it was passed. Where an enactment is intended to be retrospective it applies to pending actions.”
[72] Careful analysis shows that the 2001 Amendment is not retrospective in any of the senses set out in Halsbury but would be retrospective in sense (2) if the Court adopted Foodstuffs’ submissions in that it would alter the legal tests to be applied to conduct, namely the filing the clearance applications, which occurred before it came into force. Although the Court has held that the 2001 Amendment did not provide how clearance applications undetermined on 26 May were to be concluded, in our views, the situation has been covered by the Interpretation Act 1999 s18 and, to a lesser extent, s17. They are the contemporary reflection of statutory powers which go back at least to the Interpretation Act 1888 s21, the Interpretation Act 1908 s20 and the Acts Interpretation Act 1924 s20, all of which enabled actions commenced before statutes came into effect to be completed in accordance with former law.
[73] In view of that, it is necessary to discuss only the principal authorities on which the parties relied. In Ewart v England [1993] 3 NZLR 489, an application for past maintenance under the Family Proceedings Act 1980 was filed two days before the coming into force of the Child Support Act 1991 which revoked the right to seek past maintenance. The Family Proceedings Act was repealed contemporaneously. Neither statute contained any express transitional provision concerning applications filed prior to repeal. It was held in this Court that the Family Court continued to have jurisdiction to determine applications filed but unheard as at the date the new regime came into force, partly by reference to the Acts Interpretation Act 1924 s22 (which provided that an Act’s expiration was not to affect judicial proceedings previously commenced but enabled such proceedings to be continued as if the Act remained in force - not, of course, the situation with which we are concerned) and partly by reference to s 20(g) of that statute but giving effect to the concluding words earlier cited which have no counterpart in the Acts Interpretation Act 1999 s 18. More generally, Thomas J held (at 494) :
“Regard must also be had to the policy of the Acts Interpretation Act. It is designed to avoid the retrospective effect of new legislation and to recognise the legitimate expectations of those who have acted or exercised rights pursuant to current legislation. In this regard, those persons whose applications were filed but not heard prior to 1 July 1992 have exercised rights conferred upon them by statute and have done so in the expectation that their applications will be heard in due course in accordance with the law as it existed at the time.”
[74] In Accolade (supra) an appeal was filed within the three months required by the Court of Appeal Rules 1955 which were the Rules in force at the date of judgment appealed and the date of its sealing but between those dates and the appeal being filed the Court of Appeal (Civil) Rules 1997 came into force. They contained no relevant transitional provisions and required appeals to be brought within 28 days (or with special leave). The Court of Appeal held that the revocation of the earlier Rules did not end the right to the three month time limit unless the new Rules made it clear that they operated retrospectively. The appeal was held to have been filed within time, partly by reference to the Acts Interpretation Act 1924 s 20(e)(iii), the predecessor of s 17 of the 1999 Act but principally because (at 18) :
“Consistently with principle and in accordance with the Interpretation Act 1888, this Court a century ago similarly held that the introduction of a new shorter period did not disadvantage a person who had acquired rights under the earlier law, Falvey v Tregoweth (1897) 16 NZLR 341.
While the cases just mentioned concern the running of time relating to or during a legal process, the same principle and approach have been applied to legislation creating or abolishing rights of appeal. So a party could not take advantage of a newly-created right of appeal if that right did not exist at the time of the relevant proceeding and decision, R v Kelly [1923] NZLR 234. But if it did exist at the time when proceedings were commenced, it remained available to the parties even though it had been abolished by the time the decision was given, Colonial Sugar Refining Co Ltd v Irving [1905] AC 369 (PC) and Re an Appeal by Parekaiura Parekura (1912) 31 NZLR 1074.
To summarise and apply the principle and precedents in this case, the parties in this case had a right, in terms of the Judicature Act 1908, s 66 and the 1955 rules, in respect of proceedings in the High Court to appeal to this Court within three months of the decision given while the 1955 rules were still in force. It would be unfair and unjust to deprive the appellants of the right they had acquired. The new rules show no intend to retrospectively revoke that right.”
An example of the contrary result, namely where a subsequent statute expressly provided that its provisions operated in respect of undetermined applications is Sharplin v Broadlands Finance Ltd [1982] 2 NZLR 1.
[75] Foodstuffs particularly relied on the decision of the Privy Council in Director of Public Works v Ho Po Sang (supra) where a lessee from the Crown agreed to erect new buildings on demolition of those let to sub-tenants but was prevented by the Director of Public Works giving a rebuilding certificate which entitled the Crown lessee to give notice to the sub-tenants to quit. He did so. Proceedings were commenced but remained undetermined when the empowering provisions of the relevant ordinance were repealed. The proceedings which were before the Judicial Committee were then commenced on the grounds that there was no authority to issue the rebuilding certificate. The Hong Kong Interpretation Ordinance provided that the repeal of an enactment should not affect any right or privilege acquired under the repealed statute or affect any investigation in relation to such right. The Judicial Committee held that the Crown lessee had no right to the rebuilding certificate at the date of repeal of the ordinance and accordingly had no right to vacant possession, nor did he have the right before the date of repeal to have the earlier proceedings considered as they were neither a right nor a privilege accrued or acquired within the meaning of the Interpretation Ordinance.
[76] On the interpretation point, their Lordships held (at 922) :
“It is to be observed that under section 10 (e) a repeal is not to affect any investigation, legal proceeding or remedy “in respect of any such right”. The right referred to is the right mentioned in section 10 (c), i.e., a right acquired or accrued under a repealed enactment. This part of the provisions in paragraph (e) of section 10 does not and cannot operate unless there is a right as contemplated in paragraph (c). It may be, therefore, that under some repealed enactment a right has been given but that in respect of it some investigation or legal proceeding is necessary. The right is then unaffected and preserved. It will be preserved even if a quantification is necessary. But there is a manifest distinction between an investigation in respect of a right and an investigation which is to decide whether some right should or should not be given. Upon a repeal the former is preserved by the Interpretation Act. The latter is not. Their Lordships agree with the observation of Blair-Kerr J. that:
‘It is one thing to invoke a law for the adjudication of rights which have already accrued prior to the repeal of that law; it is quite another matter to say that, irrespective of whether any rights exist at the date of the repeal, if any procedural step is taken prior to the repeal, then, even after the repeal the applicant is entitled to have that procedure continued in order to determine whether he shall be given a right which he did not have when the procedure was set in motion.’”
That dictum is also consistent with Sri Lanka Insurance Co Ltd v Ranasinghe [1964] AC 541, 552 where the Privy Council approved that dictum from Ho Pa Sang and held that an injured driver who had issued proceedings against the other vehicle before the repeal of the relevant statute but had not had those proceedings heard had an “acquired right” for the purpose of the relevant interpretation statute which contained a provision similar to s18, their Lordships holding that the driver “had in truth a right . . . although that right might fairly be called inchoate or contingent”. Those cases and the line of authorities which followed them were also followed in Accident Rehabilitation and Compensation Insurance Corporation v Waitakere City Council 7/7/2000 HC Auckland, AP141-SW99, Salmon J para 19 pp 7-8.
[77] As earlier noted, Mr Farmer submitted that a clearance application is not an investigation in respect of an existing right but is an investigation as to whether or not a right should be given. However, with respect to counsel, this Court takes a different view. Any proposed acquirer of another business had the right to seek clearance under the former ss47 and 66. Provided the applicant did not withdraw, the Commission was obliged to process the application and reach a determination. The applicant had the right for the Commission so to do and, if necessary, might have enforced that right. There were only two possible outcomes: whether an immunity should or should not be granted should the acquisition proceed. If the application was unsuccessful, the proposing acquirer would be in no worse position than if no application had been made. If the application were successful and the acquisition proceeded, what the applicant received was immunity from attack under the Act on the acquisition for twelve months. In the Court’s view, that process is much more appropriately described as the completion of an investigation into an existing right rather than completion of an investigation as to whether a right should or should not be given. The fact that the completion of the investigation into the existing right results in what may be called a negative, namely an immunity from impugnment, is immaterial and is, in any event, one of the outcomes for which the statute provides.
Presumptions against interference with economic interests and against impracticality and in favour of a practical and workable result:
[78] In view of the earlier findings, these matters can conveniently be dealt with together.
[79] Progressive submitted that it was one of the oldest presumptions of statutory interpretation that a statute must be clear if it is intended to undermine economic interests. Mr Stevens also relied on the other presumptions earlier recounted.
[80] While those presumptions are long-standing, in our view they add nothing to the other matters already discussed. In particular, when there are two findings open to the Commission, an applicant for clearance cannot have any certainty that the application will be granted. It is therefore difficult to see that the 2001 Amendment should be construed as if the presumption against interference with a party’s economic interests were in issue. What may eventuate is the improvement in a successful applicant’s economic position whereas declining cannot detrimentally affect that position if the proposed acquisition eventuates.
[81] The Court’s findings may be somewhat more practical than the interpretation for which Foodstuffs contended, but the necessary administrative changes are required in any case for clearance applications filed since 26 May. A ruling either way would provide for a practical and workable result despite somewhat greater administrative inconvenience if the Court acceded to Foodstuffs’ submissions. However, as earlier noted, the Commission accepted that administrative convenience must yield to statutory interpretation. For all those reasons, none of these presumptions carries any major impact in the circumstances of this case.
Policy issues
[82] This aspect of the matter, too, requires, in our view, only brief consideration.
[83] There was force in Mr Farmer’s submissions that ordering that applications for clearance filed before 26 May should be determined in accordance with the law as it operated at the date of filing as opposed to the date of determination will create anomalies. Proposed acquisitions so cleared may not occur. If they occur, they may not occur for some time into the future. If they are cleared, they will be protected for 12 months from clearance, by which time the amended tests under the 2001 Amendment will have been in force for a reasonable period of time. If cleared, such applications will be immune from attack whereas, had they been determined in accordance with the 2001 Amendment, the application may not have been cleared and would accordingly have been vulnerable. In legislation such as the Commerce Act 1986, the interests of consumers in the enhancement of competition should be taken into account. It is anomalous if, as no more than an incident of filing date, a clearance application filed one day should be determined by a different test from that filed the day afterwards.
[84] Whilst those points are cogent they do not, in our opinion, override the views which we have expressed.
[85] The fact that the 2001 Amendment was to be enacted was widely known in the business community for a considerable period before the date of assent. The tests were well-known and it was only the date of assent which was in doubt. It was accordingly up to applicants, if they saw clearance as a business advantage, to lodge their applications before the date of assent. The evidence shows that an unusual number exercised their rights and took advantage of that opportunity. It may be that the imminence of the Takeover Code coming into force on 1 July 2001 was another motivating factor. The transactions affected are considerable in monetary terms but the class of those whose applications remained undetermined on 26 May is small. Whilst there may be a reduction in numbers through withdrawals or deemed declinations, the number in the class cannot be increased. Any anomalies will be rapidly cleared as applications are determined one way or the other. Clearance applications, if granted, will expire within a limited period. Those who exercised their statutory right in accordance with the law then in force prior to 26 May are entitled to have those applications determined in accordance with that law even after that date. That is particularly the case if applicants entered into transactions prior to their seeking clearance which were conditional on clearance being obtained.
[86] It remains to be seen what difference the substantially lessening competition standard will bring about in this area of the law. Even though the business community expects clearance applications to be declined more frequently than has previously been the case that remains a matter of speculation. It could not be said that the new standard is not an exacting one.
[87] In those circumstances, to hold that clearance applications filed before 26 May but not determined by that date should be dealt with in accordance with the law as it obtained at the date of application does no more than entitle a small and limited class of businesses to the benefit of a stringent test for a limited period.
[88] To the extent that fairness or justice are factors to be taken into account (Accolade (ibid), L’Office Cherifien (supra at 524) in our view those who applied before 26 May for clearance are entitled to have their clearance applications determined in accordance with the law which operated prior that date as a matter of fairness or justice. Such accords with a venerable statutory right.
[89] To the extent that administrative convenience is a factor that, too, indicates the same result.
Result
[90] For all those reasons, this Court arrives at the conclusion that applications to the Commerce Commission pursuant to the Commerce Act 1986 ss 47 and 66 for clearance of proposed acquisitions which were undetermined as at 26 May 2001, the date of the coming into force of the Commerce Amendment Act 2001, should be determined in accordance with the form of those sections as it was prior to 26 May 2001 and not in accordance with the form of those sections as amended on and after that date.
[91] It follows that the application for a declaration to the contrary brought by Foodstuffs must be dismissed.
[92] As to costs, the Commission indicated that if the result just announced were the decision of the Court, it would not seek costs. As between Foodstuffs and Progressive, if costs are to be pursued and the parties are unable to agree, memoranda may be filed with counsel certifying, if they consider it appropriate so to do, that the Court may determine all questions of costs without a further hearing. If memoranda are to be filed, that from Progressive is to be filed within 28 days of the date of delivery of this decision, with that from Foodstuffs within 35 days of that date.
[93] The parties should note that the unavailability of one member of the Court until 24 September means that a decision on costs should not be expected before that date.
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