Lodge Real Estate Ltd v Commerce Commission - [2020] NZSC 25

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IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

SC 116/2018
[2020] NZSC 25

BETWEEN	LODGE REAL ESTATE LIMITED First Appellant MONARCH REAL ESTATE LIMITED Second Appellant BRIAN KING Third Appellant JEREMY O’ROURKE Fourth Appellant
AND	COMMERCE COMMISSION Respondent

Hearing:	21 and 22 August 2019
Court:	Winkelmann CJ, Glazebrook, O’Regan, Ellen France and Williams JJ
Counsel:	L J Taylor QC and M A Cavanaugh for First and Fourth Appellants D H McLellan QC and M S Anderson for Second and Third Appellants J C L Dixon QC, L C A Farmer and M M Borrowdale for Respondent
Judgment:	2 April 2020

JUDGMENT OF THE COURT

AThe appeal is dismissed.

BThe appellants must pay costs of $35,000 plus usual disbursements to the respondent.

____________________________________________________________________

REASONS

(Given by O’Regan J)

Table of Contents

Para No.
Introduction	[1]
Issues	[6]
The facts	[7]
The law	[24]
Did the Hamilton agencies enter into an arrangement or arrive at an understanding?	[28]
The legal test	[29]
High Court	[42]
Court of Appeal	[44]
Appellants’ argument	[48]
Our approach	[50]
The factual findings	[59]
High Court	[62]
Court of Appeal	[68]
Appellants’ criticisms of the Court of Appeal judgment	[74]
Our assessment	[86]
Did the Hamilton agencies give effect to the arrangement?	[110]
Did the arrangement have the proscribed purpose or effect?	[112]
Appellants’ argument	[117]
Vendor funding	[118]
Reliance on overseas cases	[127]
Failure to undertake analysis of effect?	[137]
Exceptions permitted	[139]
Small proportion of overall price	[149]
Departing from the High Court’s findings of fact	[162]
Effect	[163]
Purpose	[172]
Result	[179]
Costs	[180]

Introduction

In September 2013, representatives of a number of Hamilton real estate agencies met to discuss a development that affected all of them. A similar meeting took place in October 2013. The development was the proposal by Trade Me Property, a division of Trade Me Ltd (Trade Me), to change its policies for charging for standard residential listings on its website, trademe.co.nz/property. The Commerce Commission alleged that as a result of these meetings, the agencies entered into a price fixing arrangement in breach of s 30 of the Commerce Act 1986.
The Commission commenced proceedings against the agencies and some of their principals, seeking pecuniary penalties. A number of agencies admitted liability and paid pecuniary penalties. The appellants – Lodge Real Estate Ltd (Lodge), its principal Jeremy O’Rourke, Monarch Real Estate Ltd (Monarch) and its principal Brian King – denied liability.[1]
[1]Some of the documents filed in the High Court refer to “Lodge Real Estate (Hamilton) Ltd”, but that is not the name used in the judgments of the Courts below or the documents filed on behalf of the first appellant in this Court. We will follow the names used in the Courts below.
The Commission’s claim against the appellants failed in the High Court.[2] The High Court Judge, Jagose J, found that the agencies which were represented at the September meeting had entered into…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2020] NZSC 25
Decision Date: 2 April 2020

CaseChat Overview and Summary

Lodge Real Estate Ltd and Monarch Real Estate Ltd, together with their respective principals, Jeremy O'Rourke and Brian King, appealed against the Court of Appeal's decision that they had entered into an arrangement in breach of section 30 of the Commerce Act 1986. The appeal was dismissed by the Supreme Court. The Court of Appeal's decision was based on the finding that the Hamilton agencies, including Lodge and Monarch, had agreed to adopt a vendor funding model for Trade Me listings, which would interfere with the competitive setting of price. The Supreme Court agreed with the Court of Appeal that the arrangement had the effect of setting the default offer price for Trade Me advertising and interfered with the competitive process in the setting of the price for Trade Me listings. The appellants were ordered to pay costs of $35,000 plus usual disbursements to the Commerce Commission.

Orders