Splice Fruit Ltd v New Zealand Kiwifruit Board
[2016] NZHC 1531
•7 July 2016
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
CIV 2016-470-36 [2016] NZHC 1531
BETWEEN SPLICE FRUIT LTD
First Plaintiff
SEEKA FRUIT INDUSTRIES LTD Second Plaintiffs
AND
THE NEW ZEALAND KIWIFRUIT BOARD
First Defendant
ZESPRI GROUP LTD Second Defendant
Hearing: (on the papers) Counsel:
G Brittain for Plaintiffs
V Casey QC for First Defendant
L A OʼGorman and B N White for Second DefendantJudgment:
7 July 2016
JUDGMENT (NO. 2) OF HEATH J
This judgment was delivered by me on 7 July 2016 at 11.00am pursuant to
Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Bush & Forbes, Tauranga Jonathan Kaye Law, Wellington Buddle Findlay, Auckland Counsel:
G Brittain, Tauranga
V Casey QC, Wellington
SPLICE FRUIT LTD v THE NEW ZEALAND KIWIFRUIT BOARD [2016] NZHC 1531 [7 July 2016]
Background
[1] On 3 May 2016, I gave judgment on an application for judicial review of three decisions of the New Zealand Kiwifruit Board (the Board). In issue was the validity of the Board’s decisions to refuse approval of discrete collaborative marketing arrangement applications that Splice Fruit Ltd (Splice) and Seeka Fruit Industries Ltd (Seeka) had proposed be undertaken in conjunction with Zespri Group Ltd (Zespri). Splice and Seeka succeeded, to the extent that I directed a rehearing of
each application before the Board.1
[2] An expedited hearing of this proceeding was directed on 7 April 2016. At that time, it was believed that a judgment on the judicial review applications was required no later than 9 May 2016, to ensure that a meaningful remedy could be granted before the start of the kiwifruit export season, if the applications were successful. As matters transpired, the judgment was needed by (and was delivered on) 3 May 2016.
[3] In the course of making directions on 7 April 2016, I indicated that costs would be on a Category 3 basis. I added that I had “signalled to [counsel for the plaintiffs] that his clients’ delays in bringing the proceeding to the point of an application for a priority hearing may be relevant to the quantification of any costs, if either plaintiff succeeds”.
[4] Splice and Seeka seek one set of costs and disbursements totalling $46,050 against the Board and Zespri, payable on a joint and several basis. The costs and disbursements have been calculated on a 3B basis. There is no issue about the arithmetic.
[5] Zespri and the Board resist an order for costs. I am asked to determine whether, and if so in what sum, costs should be ordered.
1 Splice Fruit Ltd v New Zealand Kiwifruit Board [2016] NZHC 864, [2016] NZAR 680 at para
[122].
The grounds on which Splice and Seeka succeeded
[6] In my judgment of 3 May 2016, I summarised the grounds on which Splice and Seeka sought judicial review.
[7] Three errors of law were alleged:2
[10] …
(a) First, the Board is said to have wrongly put an onus on Splice and Seeka to establish that an approval should be given, as opposed to conducting an independent assessment of whether the proposals met the regulatory aim of increasing the overall wealth of kiwifruit suppliers. (The “onus” point).
(b) Second, the Board’s decision is said to be flawed because it regarded “collaboration” as a mandatory factor to be taken into account in determining the application. It is contended that Zespri’s willingness or otherwise to collaborate with any particular applicant is irrelevant in circumstances where the Board is deciding whether they should be compelled to do so, in the overall economic interests of kiwifruit suppliers. (The “collaboration” point).
(c) Third, the Board is said to have failed to take into account mandatory factors relevant to its decision. The factors in issue are set out in reg 8, which sets out the purposes of what are called “mitigation measures”. (The “mandatory considerations” point).
(footnotes omitted)
[8] A further challenge was advanced on the basis that both Splice and Seeka had a “legitimate expectation” to a right of “appeal” from a decision on their respective collaborative marketing approval applications. The complaint was that the Board had wrongly removed the “appeal” process, after the applications were made. Splice and Seeka contended that:3
… This “right” of “appeal” was set out in the Information Document, on the basis of which the applications were made. Before the applications were determined, the Board unilaterally removed the “appeal” process, on the basis of advice received from a Queen’s Counsel to the effect that the provision of such a process was beyond the powers of the Board.
(footnotes omitted)
2 Ibid, at para [10].
3 Ibid, at para [11].
[9] Albeit faintly, Splice and Seeka also challenged the Board’s decisions on the
grounds that they were unreasonable. There was no merit in those claims.
[10] Zespri, as the other party interested in the outcome of the collaborative marketing approval applications, advanced argument on all but one of the grounds, to support the Board’s determination of the applications. Zespri was heard on the onus, collaboration, mandatory consideration and unreasonable decision points.
[11] Although a decision-maker is rarely entitled to advance argument on an application of this type, I allowed the Board to do so in response to the “legitimate expectation” issue. The general prohibition on a decision-maker entering the arena was explained by the Court of Appeal in Attorney-General v Maori Land Court.4
The Board’s assistance on the “appeal” point did not infringe that principle because its submissions were directed to explain why the “appeal” right had been removed, on advice from a Queen’s Counsel.
[12] I held that the Board had not erred in any of the respects advanced by Splice and Seeka.5 However, I found in their favour on the “legitimate expectation” point. In short, I disagreed with advice given by Queen’s Counsel.6 I added that I did not criticise the Board for removing the “appeal” process, as it properly relied on advice from a senior Silk.7
[13] A rehearing by the Board (or a nominated committee) was directed. The parties reached a sensible agreement as to how that could be done to meet the exigencies of the situation. I recorded that:8
[121] In light of my finding on the legitimate expectation point, a rehearing by the Board (or a nominated committee) is necessary. I was told that it would not be possible to constitute an Appeal Committee of the type contemplated in cl (E) of the Information Document because the chairperson will be overseas at the time the decision must be made. Both applicants were content to agree, in the unusual circumstances of this case, that a reconsideration by nominated members of the Board would meet the need
4 Attorney-General v Maori Land Court [1999] 1 NZLR 689 (CA) at 695–696.
5 Splice Fruit Ltd v New Zealand Kiwifruit Board [2016] NZHC 864, [2016] NZAR 680 at paras
[78], [82]–[85] and [89]–[90].
6 Ibid, at para [112].
7 Ibid, at para [113].
8 Ibid, at para [121].
for a remedy if they were successful on this point. The order that I will make will require reconsideration in light of the interpretation of the [Kiwifruit Export] Regulations set out in this judgment.
Analysis
[14] Splice and Seeka were both successful in obtaining relief. However, they succeeded only on the “legitimate expectation” claim. The claims that the Board erred in law, or that its decisions were unreasonable (in an administrative law sense), were refuted by Zespri and rejected by me.
[15] The first question is whether an award of cost against Zespri is required in respect of issues on which Splice and Seeka failed. On the error of law and unreasonable decision arguments that were successfully opposed by Zespri, no relief was obtained. I do not accept that it is appropriate for Zespri to be ordered to pay costs, in a case where Zespri had no responsibility for the removal of the “appeal” process that resulted in judicial review being granted.
[16] So far as the Board is concerned, I gave permission for it to take an active role on the legitimate expectation point as that did not infringe the rule that a decision maker should not appear through counsel to support its own decision. Counsel for the Board presented her submissions in a role more nearly analogous to that of an amicus curiae than a protagonist.
[17] I found that the Board had removed the “appeal” process on advice from Senior Counsel, but disagreed with his advice. I consider that the Board acted reasonably, and in a genuine belief that what it was doing was right in law.
[18] I consider that the claim for costs against the Board is governed by the Court of Appeal’s decision in Commerce Commission v Southern Cross Medical Care Society.9 In that case, the Commerce Commission had unsuccessfully opposed an
appeal to the High Court against one of its own determinations. As the Commission
9 Commerce Commission v Southern Cross Medical Care Society [2004] 1 NZLR 491 (CA). A similar approach was taken by the Court of Appeal in Alliance Party v Electoral Commission [2010] NZCA 4.
was the only respondent, and represented the only opposition to the appeal, Southern
Cross sought and was awarded costs. The Commission appealed against that order.
[19] The appeal was allowed. Delivering the judgment of the Court of Appeal, Fisher J, acknowledging the force of a submission made on behalf of the Commission that there were public interest reasons that militated against an award of costs, continued:
[16] Mr Fogarty submitted that it was in the public interest that a tribunal whose decision is under appeal should not ordinarily be responsible for costs. In his submission the true characterisation of the role of the commission when it undertook an active role on appeal was one of helping the appellate Court, not one of opposing the appeal as a party in the normal sense.
[17] We agree that it is in the public interest to have the commission take an active part to assist an appellate Court when reviewing one of its determinations in circumstances where there would otherwise be no opposition to the appeal. It would be a matter of real concern if exposure to costs operated as a disincentive to the commission’s active assistance in this situation. There would be additional expense to the public if an amicus curiae had to be appointed. The commission’s current approach would seem to us to be consistent with the encouragement which the Courts have given to the commission to play such a part. As Cooke P said in Goodman Fielder Ltd at p 20:
“In both Courts Mr McGrath has raised the question of the role of the Commission in appeals from it under the Commerce Act. He mentioned observations, said to have an inhibiting effect, in New Zealand Engineering etc Industrial Union of Workers v Court of Arbitration [1976] 2 NZLR 283 at pp 284 – 285, about the well- established principle that judicial bodies should strive not to enter the fray in a way which might appear to favour the interests of one of the parties. Those observations do not apply in their terms or spirit to a case where considerations of public interest and the effective administration of an Act arise, especially if there is no other party to put those considerations adequately before the appellate Court. In such a case it is right that the Commission should help the appellate Court to whatever extent the Commission and that Court find consistent with the Commission’s public responsibility.”
[20] While my judgment was directed to specific circumstances affecting Splice and Seeka, the outcome (and my reasoning) has wider industry significance. Both Splice and Seeka are significant suppliers. Zespri’s role, as holder of a monopsony, is central to the regulatory scheme. All three can expect to benefit in the future from the clarification of the collaborative marketing procedure set out in my judgment. Similarly, the Board is aware of its ability to continue to offer an “appeal” process,
and may take some guidance from other parts of my reasons that deal with the regulatory scheme. In those circumstances, costs should lie where they fall.
A request for clarification
[21] Counsel for Zespri seeks clarification on two points on which an appeal has been filed against my judgment. They relate to whether I made an express finding that it could enter into collaborative marketing arrangements without first obtaining approval from the Board, and whether I made any express finding that the Board took irrelevant considerations into account when reaching its decisions.
[22] Appeals have been filed. I am functus officio. The Court of Appeal will decide if I were right or wrong, and whether an appeal lies against those aspects of my reasoning. I am not entitled to say anything more.
Result
[23] For the reasons I have given, I make no order as to costs.
P R Heath J
Delivered at 11.00am on 7 July 2016
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