Gulf Group Marine Brokers Limited v Ministry of Business, Innovation and Employment

[2021] NZHC 85

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-390

[2021] NZHC 85

IN THE MATTER OF

an application pursuant to section 3 of the Declaratory Judgments Act 1908

BETWEEN

GULF GROUP MARINE BROKERS LIMITED

Plaintiff

AND

MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT

Defendant

Hearing:	30 September 2020
Appearances:	A O’Connor for Applicant S P Connolly for Defendant
Judgment:	4 February 2021

JUDGMENT OF CLARK J

Introduction

[1]                 Gulf Group Marine Brokers Ltd provides a marketing service under a service contract to those wishing to sell a motor vessel. It does not sell motor vessels at all. Gulf Group says it offers no service to any purchaser. Nor, in simply marketing a motor vessel and introducing vendors and purchasers to each other, is it acting as an “agent” in any transaction. Gulf Group seeks a declaration that it is not regarded as a “supplier” under the Consumer Guarantees Act 1993.

[2]                 The Ministry of Business, Innovation and Employment (the Ministry) is the named defendant. The Ministry says it has been improperly named as the defendant and has applied to be struck out as a party.

GULF GROUP MARINE BROKERS LIMITED v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2021] NZHC 85 [4 February 2021]

Genesis of the proceeding

[3]                 Gulf Group takes issue with the decision in Walters v Taylor Marine in which the High Court held that Taylor Marine Ltd, a company of marine brokers, came within the definition of “supplier” in the Consumer  Guarantees Act.1  Specifically,  the High Court concluded that those acting as agents in the sale of goods are “suppliers” for the purposes of the Consumer Guarantees Act.2

[4]                 The Consumer Guarantees Act gives a right of redress against a “supplier” of goods where the goods do not comply with any guarantee set out in s 5 of that Act. In Walters v Taylor Marine the yacht sold to the plaintiffs was not free from all encumbrances as the agreement between the seller and Mr Walters stated. The agreement had been prepared by Taylor Marine, the seller’s exclusive agent for the purpose of selling the vessel.

[5]                 The defendants argued that the plaintiffs’ approach to the definition of “supplier” was too broad and did not include the yacht brokers.

[6]                 As the present interlocutory proceeding does not require a determination of the actual application for a declaration, it is unnecessary to discuss the reasoning in Taylor Marine. The short point is that the High Court found Taylor Marine was effectively substituted for the seller, even though the seller was not in trade, and that Taylor Marine had assumed the obligations under the Act which would have attached to the seller had he been in trade.

[7]                 Gulf Group contends Walters v Taylor Marine is wrong in law and that a declaration is required to bring certainty to the boating industry. While Gulf Group does not specifically refer to Taylor Marine in its statement of claim it pleads that issues arise from time-to-time with motor vessels post-sale and that “recently Courts have indicated a view that an entity like Gulf Group would be a ‘supplier’ for the purposes of the Consumer Guarantees Act and as a result Gulf Group is liable for ‘supplier guarantees’ to any purchaser”.

1      Walters v Taylor Marine Ltd [2010] 2 NZLR 656.

2      At [8] and [46].

[8]Gulf Group seeks:

A declaration that a marine brokerage company providing a marketing service (designed to introduce buyers and sellers) to a vendor selling a vessel is not a “supplier” to any third party purchaser who purchases a vessel for the purposes of the Consumer Guarantees Act.

The strike-out application

[9]                 The Ministry applies under r 4.56 of the High Court Rules 2016 to be struck out as a defendant. It says it is not properly named as a defendant as it has no powers of enforcement or other regulatory function under the Consumer Guarantees Act.

[10]             Gulf Group opposes the application. It says the Consumer Guarantees Act “binds the Crown”; the Ministry is the Ministry “that has been subrogated the role and powers of policy pursuant to the Consumer Guarantees Act”; and the Ministry is the correct contradictor.

[11]             Accordingly, the only issue for determination is whether the Ministry should be struck out as defendant. The Ministry does not ask that the entire proceeding be struck out. While the Ministry does not mount a direct challenge to the proceeding itself the Ministry does query whether the proceeding is suitable for a declaratory judgment. That consideration is highlighted by the absence of a proper contradictor.

The Declaratory Judgments Act

[12]Section 3 of the Declaratory Judgments Act provides:

3        Declaratory orders on originating summons

Where any person has done or desires to do any act the validity, legality, or effect of which depends on the construction or validity of any statute, or any regulation made by the Governor-General in Council under statutory authority, or any bylaw made by a local authority, or any deed, will, or document of title, or any agreement made or evidenced by writing, or any memorandum or articles of association of any company or body corporate, or any instrument prescribing the powers of any company or body corporate; or

Where any person claims to have acquired any right under any such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or to be in any other manner interested in the construction or validity thereof,—

such person may apply to the High Court by originating summons for a declaratory order determining any question as to the construction or validity of such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or of any part thereof.

[13]             The jurisdiction to make orders under the Declaratory Judgments Act is wholly discretionary. The Court will not answer purely abstract questions in anticipation of actual controversy. It will not deal with mixed questions of fact and law:3

The procedure is designed to provide a speedy and inexpensive method of obtaining a judicial interpretation where the matter in dispute cannot conveniently be brought before the court in its ordinary jurisdiction and where a declaratory judgment would be appropriate relief.

[14]             In their “classic text”,4 Zamir  and  Woolf:  The  Declaratory  Judgment,  Lord Woolf and Jeremy Woolf, describe the declaratory jurisdiction:5

The courts original declaratory jurisdiction may be described as follows: within the limits of their general jurisdiction and subject to any express statutory provisions to the contrary the courts have a discretion to grant declarations upon any matter what so ever.

[15]             In Mandic v Cornwall Trust Board the New Zealand Supreme Court emphasised the breadth of the jurisdiction under the Declaratory Judgments Act and that the jurisdiction was not constrained beyond the threshold described by s 3 namely, that the person applying “has done or desires to do any act the validity, legality or effect of which depends on the construction or validity of any statute”.6

[16]             Access to the jurisdiction does not depend on there being an existing dispute nor is it necessary that there be a lis. While the jurisdiction is expansive,7 it is discretionary and the Court may, on any grounds which it deems sufficient, refuse to give or make any such judgment or order.8

3      New Zealand Insurance Co Ltd v Prudential Assurance Co Ltd [1976] 1 NZLR 84 (CA) at [85].

4      As described by Chambers J in Telecom v Commerce Commission [2012] NZCA 278 at [295].

5      Lord Woolf and Jeremy Woolf Zamir and Woolf: The Declaratory Judgment (4th ed, Sweet & Maxwell, London, 2011), at [3–19].

6      Mandic v Cornwall Park Trust Board [2011] NZSC 135, [2012] 2 NZLR 194 at [8].

7      Gazley v Attorney-General (1996) 10 PRNZ 47 (CA), at 50–51.

8      Declaratory Judgments Act 1908, s 10.

[17]             In Canterbury Regional Council v Attorney-General, Miller J referred to the frequency with which the High Court has refused relief pursuant to its discretion under s 10 where there was no dispute between the parties, or no proper contradictor, or the plaintiff sought an advisory opinion.9 Miller J referred to the often cited dictum of Lord Dunedin in Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd:10

The rules that have been elucidated by a long course of decisions in the Scottish Courts may be summarized thus: The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought.

Is the Ministry a proper contradictor?

[18]             Counsel for the Ministry, Mr Connolly, submitted that while the Ministry is responsible for administering the Consumer Guarantees Act that fact alone does not make it a proper contradictor.

[19]             A similar argument was considered in Canterbury Regional Council.11 In Canterbury Regional Council the High Court granted the Attorney-General’s application to be struck out as a party. Although the plaintiffs argued that the Attorney- General was the proper defendant because he was sued for the Minister for the Environment and the Minister of Local Government and the plaintiff sought declarations about the rights of elected councillors under legislation that the two Ministers administered, the Court did not agree. There was “no present or pending controversy between [the plaintiff] and the Crown, and no ministerial or official decision [was] impugned or even pleaded”.12

[20]             While the claim may have pointed to weaknesses in the legislation, it did not address the Ministers’ administration of the legislation. Miller J said one way of testing the point was to inquire whether any specific relief might be granted against the Ministers. He concluded there could be no such relief.

9      Canterbury Regional Council v Attorney-General [2009] NZAR 611 at [22].

10     At [22], citing Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd

[1921] 2 AC 438 at 448.

11     Canterbury Regional Council v Attorney-General, above n 9, at [48]–[49].

12 At [49].

[21]             Having rejected the proposition that the Attorney-General is invariably a proper contradictor in a case such as that before him, Miller J concluded there was no other defendant to serve as a proper contradictor.13 Ultimately, the Judge was satisfied the Attorney-General’s presence was not necessary to adjudicate upon the issues in that proceeding. It could not be said that the opposing interests were held in common with the public at large. The proper contradictors were able to be represented by amicus or counsel for unrepresented persons.14

[22]             The Ministry argues that the reasoning in Canterbury Regional Council is equally applicable to this proceeding. As with the Attorney-General in Canterbury Regional Council, the Ministry is not invariably a proper contradictor for issues involving the Consumer Guarantees Act; it did not have a role protecting, or arguing for the interests of consumers against those of suppliers. Mr Connolly pointed out that the Crown, including the Ministry, is in many cases a supplier itself under the Consumer Guarantees Act.

[23]             The plaintiff takes the view that the Ministry has an express policy governance role in relation to the Act and this role can be clearly distinguished from the “public interest” that the Attorney-General represents or advances in many cases.

[24]             For Gulf Group Mr O’Connor emphasised the purpose of the Declaratory Judgments Act which, I add, “enables anyone whose conduct or rights depend on the effect or meaning of an instrument, including an agreement, to obtain an authoritative ruling”.15

[25]             The second point Mr O’Connor emphasised was that r 4.56 of the High Court Rules, which the Ministry relies on for its strike-out application, does not apply. That is because Gulf Group does not seek relief. It is seeking certainty under the Consumer Guarantees Act. Mr O’Connor explained that Taylor Marine has acted as a “dangerous precedent” in the Disputes Tribunals. The decision has been held to apply to scenarios where anything is sold or marketed on behalf of another party. Mr O’Connor argued

13 At [58].

14 At [64].

15     Mandic v Cornwall Park Trust Board, above 6, at [9].

that Parliament could never have intended that those who act as agents or brokers could be held to be suppliers. A real estate agent is not, he said, a supplier of houses. Mr O’Connor also gave the example of a second-hand car dealer who he said does not become a supplier. Gulf is not suppling boats it is simply providing a marine brokerage service. Yet if the boat fails a year after sale the customer has sued the broker. The brokerage community, it is said, has been the subject of numerous adverse decisions in the Tribunal which considers itself bound by Walters v Taylor Marine Ltd.

[26]             Although Mr O’Connor was conscious of not straying into the facts, because this was not a hearing of the application for a declaration itself, he observed that had an application for service been made the Court would have directed that service be on the most relevant institution able to contradict the argument Gulf Group makes. That institution is said to be the present defendant particularly as Mr Connolly described the Ministry as an “interested observer”.

Decision

[27]             I address first the procedural barriers which Mr O’Connor says lie in the path of the Ministry’s strike-out application. I agree that Part 18 of the High Court Rules applies, as counsel identified. But I do not agree that once served a defendant “can’t get out of it” (as Mr O’Connor put it) because Part 18 contains no provisions enabling a defendant to be struck out.

What should have happened?

[28]             The relief claimed is solely under the Declaratory Judgments Act. Therefore Part 18 of the High Court Rules applies.16 A proceeding commenced under Part 18 must be commenced by a statement of claim and accompanied by an application for directions as to service and representation under r 18.7.17

[29]             Under r 18.7(3) the plaintiff must provide all the information required  by     r 18.7(3):

16     High Court Rules 2016, r 18.1(b)(vi).

17     At r 18.4(1).

In support of the application, the plaintiff must provide (by affidavit or otherwise) the information that may be necessary to enable the court to decide what persons or classes of persons are interested in, or may be adversely affected by, the relief sought by the plaintiff and by what means the interests of each such person or class of persons may be adequately represented.

[30]             Mr Connolly makes a valid point when he says had the plaintiff proceeded in the proper way the Ministry would not be in this position. Mr O’Connor resisted the application of r 18.7(3) saying r 18.7 does not apply because none of the criteria set out in 18.7(1) as to when the rule applies, is applicable to Gulf Group.

[31]             But the simple fact is that r 18.7 is made applicable by r 18.4 which requires an application to be made under r 18.7. The difficulty the Court finds itself in, in having to strike out the defendant while leaving no contradictor, might have been avoided had Gulf Group adopted the proper procedure. If Gulf Group considers there is merit in pursuing its application for a declaration despite the observations made in this judgment it needs to start again and proceed under Part 18 applying for directions as to the person or class of persons who should be served with the statement of claim and providing all the information necessary to enable the Court to decide that question

— as required by r 18.7(3). In doing so, Gulf Group will need to bring the attention of the Court to this judgment.

[32]             For the reasons that follow, I am satisfied the Ministry is not the proper contradictor. That is to say, it has no “true interest to oppose the declaration sought”.18

[33]             The Ministry resisted a suggestion made in the case management phases of this proceeding that the issue of statutory interpretation raised by the application and the Ministry’s standing as a proper defendant, could be argued together. The reason for resisting the suggestion is that the Ministry would have been, and remains, likely to abide by the decision of the Court. It is an interested observer in the sense that as a policy department it observes whether the Act is working as it should and whether it should recommend legislative amendment. The Ministry does not advocate for either consumers or suppliers. The only course would be for it to abide.  It has no argument

18 Canterbury Regional Council v Attorney-General, above n 9, at [22], citing Russian Commercial and Industrial Bank v British Bank for Foreign  Trade  Ltd  [1921] 2 AC 438 at 443, per Lord Dunedin.

to make. If anything, Mr Connolly suggested the Ministry may be seen as a supplier not a consumer. It is a supplier at times so were it to have an interest it would be in its capacity as a supplier.

[34]             Further, the Ministry could not be bound in any relevant sense. Were the declaration to be granted it could have no effect or impact on the Ministry. Even if its position might be, at times, analogous to that of a supplier its interest could never approach those of a marine broker.

[35]             Mr Connolly candidly acknowledged that if the Court were satisfied the Ministry is not the proper contradictor, he could think of no other defendant who is. Gulf Group’s case is that it would be greatly assisted in having what is essentially a matter of statutory interpretation clarified by the Court. The question Gulf Group seeks to have decided via its proposed declaration is whether Walters v Taylor Marine Ltd was correctly decided. Mr Connolly said this is the issue the plaintiff wants to have resolved.

[36]             In Canterbury Regional Council v Attorney-General where the plaintiff sought declarations that its elected members were not disqualified from conducting hearings under the Resource Management Act 1991, Miller J said:19

[43] … contrary to [the plaintiff’s] argument, the Attorney may not be sued whenever a plaintiff wants a declaration about the meaning of public legislation or raises a “public law issue”, and whether or not relief is sought against the Crown. The Attorney-General is not invariably a proper contradictor in the sense used by Lord Dunedin — a person with a true interest to oppose the declaration sought. The Crown does not by definition have an opposing interest in every such case; on the contrary, legislation normally binds it too and its interest, if any, may be aligned with the plaintiff’s … .

(footnotes omitted)

[37]             As Miller J observed in that case, if the plaintiff’s position were correct, the Attorney-General might be joined in every case involving the construction of legislation whether or not there was another contradictor and whether or not the Attorney-General agreed with the plaintiff. In my view the position is even more obvious in relation to the Ministry. The Attorney-General is recognised to have

19     Canterbury Regional Council v Attorney-General, above n 9.

various roles and interests such as to enforce public rights, represent the public interest, appear where important issues of public interest arise and have responsibility for criminal prosecutions — to name but some. In relation to the Consumer Guarantees Act, the Ministry has no role beyond a policy function. In that regard, its relationship is with Ministers and Government, not advocating for or against interest groups in the Courts.

[38]             Nor does the Ministry’s legislative responsibility for administration of the Consumer Guarantees Act make it a proper contradictor. In Canterbury Regional Council the Judge said the plaintiff’s claim may point to weaknesses in the legislation but the claim did not bear on administration of the Act.20

[39]             Although Mr O’Connor submitted the matter raised by the application for a declaration was one of statutory interpretation, he also confirmed that Gulf Group has no issue with the Consumer Guarantees Act itself. Its issue is with the approach to it as reflected in Walters v Taylor Marine.

[40]             In those circumstances it seems the obvious and proper course is for litigants who are adversely affected by the Tribunal’s decisions made in reliance on the High Court decision, to appeal. It does not strike me as a proper use of the declaratory judgment jurisdiction to revisit a High Court decision decided two decades ago in the context of an inter-party dispute. If, as Mr O’Connor says, Walter v Taylor Marine has been cited in disputes involving tractors and diggers and is regarded as having broad application, and that a large number of Tribunal decisions have adversely affected some parties, the obvious course as I have mentioned is to take those decisions on appeal.

[41]             As Mr Connolly submitted if Taylor Marine has been problematic throughout the marine and other industries, one would have expected the decisions made in reliance on that case to have been challenged.

20     Canterbury Regional Council v Attorney-General, above n 9, at [49].

Result

[42]The application to remove the defendant as a party to the proceeding is granted.

[43]             Having succeeded in its application and as costs follow the event, the defendant is entitled to costs which are awarded on a 2B basis.

Karen Clark J

Solicitors:

Surridge & Co, Mana for Plaintiff

Crown Law Office, Wellington for Defendant