Van Leeuwen Group Limited v Attorney-General
[2020] NZHC 215
•19 February 2020
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IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2019-485-562
[2020] NZHC 215
UNDER the Declaratory Judgments Act 1908 and Part 18 of the High Court Rules 2016 IN THE MATTER
of an application for a declaratory judgment in respect of the meaning of section 162A of the Biosecurity Act 1993
BETWEEN
VAN LEEUWEN GROUP LIMITED
Applicant
AND
THE ATTORNEY-GENERAL
Respondent
Hearing: 12 December 2019 Appearances:
M S Smith for the Applicant W Aldred for the Respondent
Judgment:
19 February 2020
JUDGMENT OF COOKE J
Table of Contents
Background[4]
The relevant compensation provisions[5]
Claims by Van Leeuwen Group[9]
Stay in support of arbitration processes[15]
Relevance of Declaratory Judgments Act 1908[22]
Should a stay be entered here?[32]
Is there a relevant dispute in relation to two of the issues raised by these proceedings?[43]
Conclusion[52]
VAN LEEUWEN GROUP LIMITED v THE ATTORNEY-GENERAL [2020] NZHC 215 [19 February 2020]
[1] The Attorney-General applies to strike out these declaratory judgment proceedings in which the Van Leeuwen Group seeks declarations as to the true meaning and effect of the compensation provisions in the Biosecurity Act 1993 (the Act). There is no dispute that the Van Leeuwen Group is entitled to compensation under those provisions following the exercise of biosecurity powers under the Act by the Ministry of Primary Industries (MPI) after an outbreak of mycoplasma bovis (M.bovis) in 2017. But the proceedings raise questions as to whether particular categories of compensation are available as a matter of principle under the relevant provisions.
[2] The Attorney-General says the proceedings should be struck out or stayed for two reasons:
(a)That as a consequence of s 162A(6) of the Act and art 8(1) of Schedule 1 of the Arbitration Act 1996 the subject matter of this proceeding must be referred to arbitration and any High Court proceedings stayed; and
(b)In relation to two of the issues raised in the proceedings, that there is no relevant dispute properly to be determined in declaratory judgment proceedings.
[3] It is not disputed that the Court has jurisdiction to stay or strike out the proceedings. It may be, however, that a strike out would involve the application of the Court’s inherent jurisdiction rather than the application of r 15.1 of the High Court Rules 2016.1 But in any event it is clear that the High Court has jurisdiction to stay the proceedings if they are inconsistent with art 8 of the first schedule of the Arbitration Act 1996.
1 See by way of analogy Friends of Pakiri Beach v McCallum Brothers Ltd [2008] NZCA 87, [2008] 2 NZLR 649 at [14]–[17]. The discretion as to relief would then be applied when the proceedings were substantively considered.
Background
[4] Biosecurity is of importance to the New Zealand economy because of the prevalence of primary production. There are elaborate, and at times stringent controls set out in the Act and related legislation. These include controls on the importation on things that may pose a biosecurity risk,2 and then powers to deal with the eradication or management of unwanted organisms or pests that are identified. The present case involves MPI’s exercise of powers to eradicate or manage an outbreak of the M.bovis virus in New Zealand cattle.
The relevant compensation provisions
[5] When eradication or management powers are exercised under the Act, for example to destroy or restrict the movement of crops or animals, compensation is available to those who are adversely affected. Section 162A provides:
162A Compensation
(1)This section applies when—
(a)powers under this Act are exercised for the purpose of eradicating or managing an organism; and
(b)the powers are not exercised to implement a pest management plan or pathway management plan; and
(c)the exercise of the powers causes loss to a person as a result of—
(i) damage to or destruction of the person’s property; or
(ii) restrictions imposed under Part 6 or 7 on the movement or disposal of the person’s goods; and
(d)there is no agreement under Part 5A that applies to the loss and whose provisions on compensation are expressed to take priority over this section.
(2)The person is entitled to compensation under this section for loss that—
(a)is verifiable; and
2 See for example New Zealand Pork Industry Board v Director-General of the Ministry for Primary Industries [2013] NZSC 154, [2014] 1 NZLR 477 in relation to a challenge to the relaxation of import controls in relation to pork, and National Beekeepers’ Association of New Zealand v Chief Executive of the Ministry of Agriculture and Forestry [2007] NZCA 556 in relation to a challenge to the relaxation of controls of the importation of honey and other bee products.
(b)is loss that the person has been unable to mitigate by taking every step that is reasonable in the circumstances.
(3)Compensation must not be paid if—
(a)the person’s loss relates to unauthorised goods or uncleared goods; or
(b)the person suffered the loss before the time at which the exercise of the powers began; or
(c)the person failed to comply with biosecurity law—
(i) in a serious or significant way; or
(ii) in a way that contributed to the presence of the organism; or
(iii) in a way that contributed to the spread of the organism.
(4)The amount of compensation paid must put the person to whom it is paid in no better or worse position than a person whose property or goods are not directly affected by the exercise of the powers.
(5)The period for making a claim for compensation after the date on which the loss suffered by the person ought reasonably to have been verifiable is—
(a)within 1 year from the date; or
(b)after 1 year from the date, if the person was unable to make a claim within 1 year because of circumstances beyond the person’s control.
(6)If there is a dispute about eligibility for, or the amount of, compensation,—
(a)the dispute must be submitted to arbitration; and
(b)the arbitration must be conducted under the Arbitration Act 1996.
(7)Compensation payable by a Minister or a chief executive is payable from money appropriated by Parliament for the purpose.
[6] These compensation provisions were originally enacted by the Biosecurity Amendment Act 1997, and then amended as a consequence of the Biosecurity Law Reform Act 2012. There is surprisingly little authority on their meaning and effect notwithstanding that they have been in effect for over 20 years. On the information available to me the powers have been exercised frequently and there have been a large number of claimants. The provisions were referred to in an indirect way in the High
Court judgment in Strathboss Kiwifruit Ltd v Attorney-General in the context of a negligence claim against the Crown.3 The powers that triggered compensation were also considered in Waimea Nurseries v Director-General for Primary Industries in relation to a challenge to the exercise of biosecurity powers.4 But otherwise there has only been one decision on appeal on a question of law following an arbitration under Schedule 2 of the Arbitration Act 1996. This was in Mystic Ferrets Ltd v Ministry of Agriculture and Forestry, which was a case that very much turned on its own peculiar circumstances.5 Harrison J also dealt with the appeal with customary efficiency without dwelling on the meaning and effect of the relevant provisions more generally.
[7] It is always appropriate to consider the text of an enactment in light of its purpose,6 and to make the Act work as Parliament must have intended.7 Here it is apparent that the right to compensation exists as a matter of fairness to those adversely affected by the exercise of coercive powers. But there are additional policy considerations affecting the purpose of the compensation provisions. They were described in the Primary Production Select Committee Report which preceded the initial enactment of the compensation provision. The Select Committee said:8
The new clause [which became s 162A] makes it clear when compensation may be payable and also sets out those situations where compensation will not be payable …
… The rationale for the government paying compensation is to encourage the reporting of unwanted organisms so they can be eradicated. The level of compensation payments and the costs of eradication provide government with a strong incentive to commence eradication of a potentially unwanted organism as soon as possible after its presence has been reported.
[8] It follows that an interpretation consistent with these incentives should be preferred. Some guidance may be available from decisions concerning compensation in other statutory contexts, such as compensation under the Public Works Act 1981, or
3 Strathboss Kiwifruit Ltd v Attorney-General [2018] NZHC 1559 at [446]–[451].
4 Waimea Nurseries v Director-General for Primary Industries [2018] NZHC 2183, [2019] 2 NZLR 107 at [15], [84]–[86].
5 Mystic Ferrets Ltd v Ministry of Agriculture and Forestry HC Hamilton CIV-2007-419-1614, 20 March 2008.
6 Interpretation Act 1999, s 5(1); and Commerce Commission v Fonterra Co-operative Ltd [2007] NZSC 36, [2007] 3 NZLR 767 at [22].
7 Northland Milk Vendors Association Inc v Northern Milk Ltd [1988] 1 NZLR 530 at 538 (CA).
8 Biosecurity Amendment Bill (No 4) (216-2) (select committee report) at 510.
other statutory regimes.9 In all such cases the particular statutory provisions will be important. The statutory language used here, and particularly the guiding provision in s 162A(4), may suggest that what is involved is a statutory enactment of the indemnity principle contemplated by insurance law.10
Claims by Van Leeuwen Group
[9] The Van Leeuwen Group is a significant dairy enterprise operated by Adriaan Van Leeuwen and his wife Wilma. The Group owns 13 dairy farms and six dry stock farms. In July 2017 M.bovis was identified at one of the farms. Subsequent testing identified positive results potentially suggesting M.bovis was present on four others. MPI exercised its powers under the Act, including by issuing notices under s 130 of the Act preventing the movement of livestock off any of the Van Leeuwen Group farms as well as the culling of some animals. Such biosecurity measures operated for a period of time until notification by letter from MPI to the Van Leeuwen Group was given in August 2019 that the animals on the properties were no longer subject to any movement restrictions.
[10] The Van Leeuwen Group has made substantial compensation claims under the Act as a consequence. The affidavit from Katherine Glover, the Senior Claims Assessor at MPI sworn 6 November 2019 says that the Ministry had paid
$6,339,884.16 to the Van Leeuwen Group in relation to those claims. MPI has declined to pay compensation in relation to particular categories of loss, however. This includes a claim in relation to the cost of professional services incurred by the Van Leeuwen Group in the amount of $428,073.18. Other claims for compensation have been made, but not finally assessed by MPI at the time the affidavits were sworn for the purposes of the application before me.
[11] The Van Leeuwen Group refer to MPI’s general approach to compensation. In November 2018 a Guide was released by MPI in conjunction with two industry bodies, Beef + Lamb New Zealand and DairyNZ. It was entitled “Compensation Guide for
9 For example under the Canterbury Earthquake Recovery Act 2011 or Greater Christchurch Regeneration Act 2016 – see Ace Developments Ltd v Attorney-General [2017] NZCA 409, [2017] 3 NZLR 728.
10 See Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2016] NZSC 158, [2017] 1 NZLR 352 at [35].
New Zealand Farmers affected by mycoplasma bovis response — Navigating Ministry for Primary Industries Compensation Claims Process”. It is apparent that one of the purposes of the Guide was to advise those affected what they could and could not claim compensation for. In a number of places the Guide states that no compensation is available for the cost of preparing compensation claims. Indeed at one point under the heading of “Commonly made mistakes” MPI advises that this may not be claimed in the following way:
Mistake Explanations … … Including professional fees such as hiring an agent or accountant or lawyer to prepare your claim. MPI is not able to pay for this service because preparing a claim is not a loss caused by MPI exercising powers under the Act for the eradication of M.bovis employing financial legal advice services is at your own expense. This also applies to hiring external
consultants.
[12] At one other point this limitation appears to be directed to any cost of external consultants whether or not in connection with the preparation of the claim.11
[13] The statement of claim was filed in October 2019. It seeks declarations that a number of categories of compensation the Van Leeuwen Group has claimed are recoverable as a matter of principle. In particular the following declarations are sought:
(a)A declaration that finance costs incurred consequent on the M.bovis response are in principle recoverable under s 162A of the Act.
(b)A declaration that professional consultancy costs incurred by the purpose of assisting a person to mitigate and to take steps to limit financial losses are in principle recoverable under s 162A of the Act.
11 At page 13 of the Guide. See [49] below.
(c)A declaration that professional consultancy costs incurred for the purpose of assisting a person to prepare claims for compensation under s 162A are in principle recoverable under s 162A of the Act.
[14] As will be explained in greater detail below the Attorney-General advises that it accepts that costs subject to the declarations in (a) and (b) above are not excluded as a matter of interpretation, and contends that the proceedings ought to be struck out for a lack of any dispute in relation to those matters.
Stay in support of arbitration processes
[15] The primary ground for the Attorney-General’s application to strike out or stay these proceedings is that the jurisdiction of the High Court to grant such declarations is excluded as a consequence of the statutory compensation scheme. Under s 162A(6) of the Act a dispute about eligibility for, or the amount of compensation must be submitted to arbitration conducted under the Arbitration Act 1996. In addition art 8 of the first schedule of the Arbitration Act 1996 provides:
8 Arbitration agreement and substantive claim before court
(1)A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred.
(2)Where proceedings referred to in paragraph (1) have been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.
[16] Article 5 of the first schedule also provides that “In matters governed by this schedule, no court shall intervene except where so provided in this schedule”.
[17] Arbitral proceedings can nevertheless can come before the High Court. Under art 5 of Schedule 2 of the Arbitration Act there is a right to appeal the decision of an arbitration panel to the High Court on questions of law with the leave of the Court. Furthermore under art 4 the Court may determine a preliminary point of law submitted to it by the arbitral tribunal, or with the consent of the parties to the arbitration. There
is accordingly a statutory scheme which regulates when the High Court may become involved in an arbitration. Ms Aldred for the Attorney-General contends that these declaratory judgment proceedings cut across this scheme, and that the Court must strike out/stay these proceedings as s 162A(6) of the Act and art 8(1) of the Arbitration Act 1996 apply.
[18] The High Court is normally receptive to such arguments. The Court recognises the importance of arbitral proceedings, and the autonomy of the parties who wish to choose arbitration for dispute resolution. The principle of non-interference in the face of an arbitration agreement accepts the parties’ right to conduct their private affairs as they choose.12 The role of the Courts is to support, not supplant, the extra-judicial process the parties have chosen to adopt.13
[19] Indeed the Court has extended the scope of the jurisdiction to stay High Court proceedings in support of arbitral proceedings even when they are not strictly within the provisions of the Arbitration Act. Arbitration clauses are given a broad interpretation to give effect to a “one stop shop” concept to prevent issues being excluded from the scope of the arbitration as a matter of interpretation.14 In addition the Court can apply an inherent jurisdiction to stay High Court proceedings when the proceedings are only related to disputes that are subject to arbitration, even in relation to parties who are not the subject of an arbitration clause.15 This is on the basis that it is more appropriate for the matters to be determined by arbitration, or for the arbitration to proceed first.
[20] The legislative predecessor to art 8 of the Arbitration Act 1996, s 5 of the Arbitration Act 1908, did not compel the Court to grant a stay but rather gave the Court a discretion to enter one. I accordingly accept Ms Aldred’s further point that the changes made by the 1996 Act reiterate Parliament’s desire to support the arbitral
12 Arbitration Act 1996, s 5(a).
13 See Michael Mustill OP Malhotra SC The Law and Practice of Arbitration and Conciliation (New Dehli, LexisNexis, 2002) as cited in Openyd Ltd v Lawrence [2019] NZHC 46 at [48].
14 Marnell Corrao Associates Inc v Sensation Yachts Ltd (2000) 15 PRNZ 608 (HC); and Tamihere v MediaWorks Radio Ltd [2014] NZHC 2082, [2014] NZAR 1113 at [23]–[24].
15 See G J Lawrence Dental Ltd v Alusi Ltd [2018] NZHC 1342 at [24]–[27]; Openyd v G J Lawrence Dental Ltd [2018] NZHC 1618 at [32]–[36]; and Danone Asia Pacific Holdings Pty Ltd v Fonterra Co-operative Group Ltd [2014] NZHC 1681 at [33]–[39].
processes. I also accept that this answers Mr Smith’s reliance on earlier authorities, including the decision of Cooper J in Young v The New Zealand Insurance Company where the Court declined to stay declaratory judgment proceedings given the existence of an arbitration clause.16 That is because the Arbitration Act 1908 clearly gave the Court a discretion, and it could decline to stay High Court proceedings in support of an arbitration. But it is also true that a stay will only be issued if the other party to the arbitration seeks it within the time period required.17 So it seems to me that the policy of supporting party autonomy is at the heart of art 8 of the Arbitration Act 1996.
[21] Against that background it might be expected that a stay would be granted here given that the Attorney-General, who may be taken to represent MPI, has applied within the time required. Mr Smith sought to argue that the interpretation issues that are subject to this proceeding do not fall within the concept of “a dispute about eligibility for, or amount of, compensation” within the terms of s 162A(6) of the Act, and accordingly the compulsory arbitration procedure. However I accept Ms Aldred’s submission that the words do cover such arguments. Whilst the matters sought to be raised in this declaratory judgment proceeding are narrower than the disputes that are potentially subject to arbitration, and depend on questions of interpretation rather than the full factual disputes, it seems clear to me that they are within the disputes within the jurisdiction of the arbitrator. It would be within the jurisdiction of the arbitrator to determine any disputes on the meaning and effect of s 162A, and accordingly such matters are contemplated by s 162A(6). Indeed these issues would be the very matters that could be subject to the jurisdiction of the High Court under appeal under the arbitration provisions.
Relevance of Declaratory Judgments Act 1908
[22] But there is an additional dimension in the present case that, as far as I can tell, has not been previously considered by the authorities. Mr Smith relied on s 11 of the Declaratory Judgments Act 1908. This section provides:
16 Young v The New Zealand Insurance Company (1909) 29 NZLR 50 (SC).
17 Arbitration Act 1996, sch 1 art 8(1).
11Declaratory judgments or orders in cases where Court cannot give relief
The jurisdiction hereby conferred upon the High Court to give or make any declaratory judgment or order shall not be excluded by the fact that the said Court has no power to give relief in the matter to which the judgment or order relates, or that such matter would, independently of this Act, be within the exclusive jurisdiction of any other Court.
[23] The section recognises the ultimate constitutional function of the Court to interpret the law, particularly statute law. That role was emphasised by the decision of a full court of the Court of Appeal in Electoral Commission v Tait.18 Here the Court said:
[31] The Courts cannot, however, refuse to give or make a declaratory judgment or order on a ground which is inconsistent with the Courts’ essential function. Broadly speaking, that function is to interpret and apply the law to the facts of a particular case. With respect to statutes, the Courts have the function of authoritatively construing legislation, that is, determining the legislation’s legal meaning so far as is necessary to decide a case before it. See The Laws of New Zealand: “Statutes”, Garth Thornton, para 120, at p 119. It is the Courts’ task to interpret and enforce provisions which confer rights, or impose duties, or vest powers in named persons or bodies, including governmental agencies. In discharging this task they are giving effect to the will of Parliament. See Peter Cane, An Introduction to Administrative Law (Clarendon Press – Oxford, 1986) at p 12. To the extent that the task is not discharged a person or body may be deprived of a statutory right, or may fail to perform a statutory duty, or may be divested of an intended power. Consequently, it is imperative that persons or bodies have access to courts of law to determine the rights, duties or powers which Parliament has conferred on them by statute.
[32] The Courts’ function to interpret and enforce statutory law has implications for the rule of law. Unless the meaning of a statute is declared when it is validly in dispute, the law, and with it, the lawfulness of the person or body’s actions, will be uncertain. Thus, where a body purports to act in accordance with a disputed interpretation of a statutory provision, and on the proper interpretation it does not have that power, the body will be acting illegally and any person affected will be deprived of a right or rights which he or she is entitled to enjoy under the law. To avoid this situation the Courts’ authoritative interpretation is required. No one under the rule of law is able to escape the disinterested judgment of the law, and rendering that disinterested judgment is the function of an independent judiciary.
[24] Mr Smith argued that as a consequence of s 11, interpreted in light of the fundamental role of the Courts to interpret the law when it is in dispute, that no automatic stay arises by virtue of s 162A(6) of the Act or art 8(1) of the Arbitration
18 Electoral Commission v Tate [1999] 3 NZLR 174 (CA).
Act, and that any question of the Court’s discretion in relation to relief to grant declaratory judgment should not be exercised against the Attorney-General.
[25] Ms Aldred argued that s 11 was not relevant as it had more confined scope relating only to limitations on the power to grant relief. I do not accept that s 11 is so limited. It seems to me to be addressing the question of the High Court’s jurisdiction, and reiterates that it continues even if another Court has exclusive jurisdiction. Given the constitutional function of the High Court it seems to me to apply in circumstances where it is argued that the Court’s jurisdiction to grant declarations is said to be excluded by other statutory provisions.
[26] Whilst s 11 only refers to a situation when exclusive jurisdiction is given to another “Court” it does not seem to me to be limited to the Courts in any technical sense, and extends to the courts and other tribunals exercising quasi-judicial functions under a statute. Tribunals could not have a greater claim to exclusive jurisdiction than the courts proper. What is important is the jurisdiction bestowed on the relevant body by Parliament, rather than the label used to name it. Indeed when the Declaratory Judgments Act was debated in Parliament on its enactment, the meaning and effect of s 11 was debated by reference to the jurisdiction exercised by the “Arbitration Court”, which was effectively the predecessor to the current Employment Court.19
[27] Neither do I think it material that art 5 and 8(1) of Schedule 1 of the Arbitration Act go further than s 162A(6) of the Act by directing a stay in support of the exclusive jurisdiction given by s 162A(6). Articles 5 and 8(1) still falls within the terms of s 11
— they are statutory provisions giving exclusive jurisdiction to the arbitral tribunal, and preventing the High Court granting relief. That is particularly clear when s 11 is interpreted in light of its purpose and constitutional background.
[28] I also accept that the decision of the Supreme Court in Mandic v Cornwell Park Trust Board is particularly relevant here.20 As Mr Smith said, the Court there emphasised that there was no need for a lis between parties for the jurisdiction under
19 (10 September 1908) 145 NZPD 22–25.
20 Mandic v Cornwell Park Trust Board [2011] NZSC 135, [2012] 2 NZLR 194.
the Act to arise.21 In the present case the substantive dispute between the Van Leeuwen Group and MPI must go to arbitration. There is no question about that. But the Van Leeuwen Group argues that questions about the interpretation of statutes, such as those arising here, and which will have implications for other persons, remain within the jurisdiction of the High Court under the Declaratory Judgments Act 1908. That view is supported by the general approach to provisions apparently excluding the Court’s jurisdiction. In H v Refugee and Protection Officer the Supreme Court referred to the constitutional importance of judicial review, reinforced as it is by s 27(2) of the Bill of Rights Act 1990.22 The Court stated that “the courts approach privative clauses cautiously and in particular will give anxious consideration to their interpretation and application”.23 The Court noted that it could strike out judicial review proceedings when it was satisfied that an available appeal right provided a more appropriate pathway in such cases.24 But in doing so it held that “since the decision of the Court of Appeal in Bulk Gas Users Group v Attorney-General, it has been settled law that a privative provision does not necessarily prevent scrutiny of a decision based on an error of law on the part of a decision-maker that is otherwise reviewable”.25 This supports the view that the Court’s jurisdiction to grant declarations remains.
[29] The same conclusion is reached if the question is addressed as one involving potentially inconsistent statutory provisions — s 162A(6) of the Act and arts 5 and 8(1) of Schedule 1 of the Arbitration Act 1996 on the one hand, and s 11 of the Declaratory Judgments Act 1908 on the other. The modern approach to such issues no longer involves the application of apparently decisive maxims such as generalia specialibus derogant or implied repeal pro tanto, but rather stepping back and construing the relevant provisions to determine what Parliament must have intended.26 This can involve adopting an interpretation that reconciles the apparent inconsistency
21 At [5]–[9] and [82].
22 H v Refugee and Protection Officer [2019] NZSC 13, [2019] 1 NZLR 433.
23 At [63].
24 At [78].
25 Bulk Gas Users Group v Attorney-General [1983] NZLR 129 (CA). Whilst the section here has greater similarities to the privative clause considered in Tannadyce Investments Ltd v Commissioner of Inland Revenue [2011] NZSC 158, [2012] 2 NZLR 153 in which the majority held the privative clause excluded judicial review, there was no equivalent to s 11 of the Declaratory Judgments Act 1908 at issue.
26 See Ross Carter Burrows and Carter Statute Law in New Zealand (5th ed, LexisNexis, Wellington, 2015) at Chapter 14.
in a way that allows the two statutes to live together.27 Such an approach can allow the Court to give a degree of primacy to legislative provisions that involve issues of constitutional principle.28 Here the purposes of both sets of provisions can be given effect by allowing s 11 of the Declaratory Judgments Act 1908 to preserve the jurisdiction of the High Court, but with the discretion in relation to the grant of a stay/to grant a declaration exercised in light of the Parliamentary preference for the arbitration procedure contemplated by s 162A of the Act, and arts 5 and 8 of the Arbitration Act 1996. The provisions can be allowed to work in a complimentary way. Adopting that approach would mean that there would need to be some compelling reason why a stay of declaratory proceedings would not be granted in support of arbitral proceedings.
[30] For these reasons I conclude that, as a consequence of s 11 of the Declaratory Judgments Act 1908 the grant of a stay is not automatic. Rather the Court should consider whether it is appropriate to stay the declaratory judgment proceedings given the existence of the arbitration procedures. I accept it can do so at this interlocutory stage, albeit that questions of discretion can also be addressed at the hearing of the substantive application.
[31] I emphasise that there remains the important issue — whether the Court should strike out or stay declaratory judgment proceedings in its discretion given the existence of the arbitration procedures, including the rights of appeal to the High Court. But I reject the argument that this Court is compelled to grant a stay, or to strike out the proceedings as a consequence of the operation of s 162A(6) of the Act and art 8(1) of the Arbitration Act. Rather the Court needs to consider the question of the issue of a stay on its merits in light of what the Van Leeuwen Group wishes to have determined in these declaratory judgment proceedings notwithstanding its rights to go to arbitration, including its right of appeal to the High Court following a determination by an arbitrator.
27 See Re Silver Brothers Ltd [1932] AC 415 at 423 (PC).
28 See R v Pora [2001] 2 NZLR 37 (CA).
Should a stay be entered here?
[32] The remaining question is whether a stay should be entered in the present case for the reasons advanced by the Attorney-General — namely the existence of the arbitration scheme (including appeals on questions of law to this Court), and the suggested lack of genuine dispute in relation to two of the three issues raised.
[33] On these questions it is significant that the issues of interpretation that are raised will be relevant to other parties other than Van Leeuwen Group. A number of affidavits have been filed from other parties that support the continuation of these proceedings because of the impact of the proper meaning and effect of the legislative provisions in other contexts. Affidavits were provided by Ian Moore, Frank Peters, Hendrik Smit and Duncan Barr — all of whom are associated with dairy farms that are independent of those operated by the Van Leeuwen Group and all of whom were affected by MPI’s response to the M.bovis outbreak. An affidavit was also provided by Darryl Clark, an oyster farmer whose operation was affected by MPI’s response to the detection of bonamia ostreae in Big Glory Bay. All this evidence is to the effect that greater clarity about the meaning and effect of the legislative provisions would be of considerable importance to them and others.
[34] As the Supreme Court emphasised in Mandic, providing such clarity is one of the points of the Declaratory Judgments Act 1908, which is why there is no need for an active dispute or lis.29 Indeed proceedings could have been brought by any party seeking to represent those affected, or potentially affected by these powers to seek greater clarity on the meaning and effect of the relevant provisions even though the relevant applicant itself would have no claim to make under the Act. For example an industry body could have done so, and could do so now. Even the Attorney-General could have approached the High Court seeking declarations if he was uncertain as to the meaning and effect of the relevant legislation in order to obtain declarations that will provide greater clarity for him, and the affected members of the public. Given that, it would be surprising if a body that is even more directly affected by these provisions, like the Van Leeuwen Group, could not do so. This is a significant factor in favour of the Van Leeuwen Group being able to seek such relief.
29 Mandic v Cornwall Park Trust Board, above n 20.
[35] But a stay would nevertheless be appropriate if it appeared to the Court that any consequential appeal to the High Court on questions of law under art 5 of Schedule 2 of the Arbitration Act would adequately address any disputed questions of statutory interpretation affecting members of the public more broadly. At the hearing of the application I asked Ms Aldred to provide me with information relevant to this, as it was not provided in the affidavit material. I was informed that in the 20 years since the establishment of the compensation scheme there had only ever been one appeal to the High Court, which as earlier noted involved a very unusual set of circumstances.30 Ms Aldred also advised that there had only ever been four arbitrations conducted under the provisions of the Act. Given the privacy typically associated with arbitration I also do not understand those arbitration decisions to be publicly available to provide guidance on how the sections are to be interpreted and applied.
[36] It is apparent that MPI receives a large number of compensation claims under the relevant provisions. Ms Aldred explained that for M.bovis alone that there was some 1,500 claimants. There have, of course, been various other outbreaks/detections of adverse organisms involving the exercise of MPI’s powers. I note that in a footnote in Strathboss Kiwifruit Ltd, Mallon J referred to evidence from a former Director General to the effect that there had been problems with the compensation provisions, with his example being the spraying of a large urban environment to manage or eradicate pests where there “can be a large number and variety of claims”.31 This illustrates that the majority of claims are dealt with outside arbitration, and without any High Court appeal decisions providing guidance.
[37] This could mean that the provisions are working extremely well, and there is no need for Court interference outside of the regime for appeal rights. But that is not indicated by the affidavits from Mr Van Leeuwen of the Van Leeuwen Group or the affidavits from Messrs Moore, Peters, Smit, Barr or Clark described above. The thrust of their evidence is that the combination of delay, uncertainty and lack of clarity on the meaning and effect of the provisions is causing significant prejudice. What this evidence suggests is that it is possible that, in the course of managing the financial
30 Mystic Ferrets Ltd v Ministry of Agriculture and Forestry, above n 5.
31 Strathboss Kiwifruit Ltd v Attorney-General, above n 3, at footnote 322.
exposure of the Crown under these provisions, claimants may be being paid less than their full entitlement. The primary production sector can involve persons who have tight financial circumstances, and the adverse effects of MPI’s biosecurity measures may place such parties in difficult financial circumstances, and stretched cashflow. To embark upon a formal arbitration may not be realistic for some such parties, particularly in relation to claims such as for professional fees, which may make up only a small part of an overall claim. It may not make sense for such parties to seek to arbitrate over comparatively small amounts. Yet for the Crown overall an approach that did not pay out on such claims may involve significant financial savings.
[38] I emphasise I do not make factual findings on those allegations at this point. But this potential seems to me to be a significant point in favour of allowing the declaratory judgment proceedings to continue. There are potential access to justice considerations. And in any event, what the information demonstrates is that the arbitration regime, and subsequent appeals to the High Court, has not provided a realistic avenue for any issues concerning the meaning and effect of the legislative provisions to be fully addressed.
[39] It is also relevant that the policy factors in favour of granting a stay in support of arbitral proceedings are largely absent here. As already indicated, a key reason for the grant of stay in support of arbitral proceedings is party autonomy.32 If parties have chosen in their contractual arrangements to resolve their disputes by way of arbitration then this should be respected when a party seeks to rely on the arbitration clause.33 But that feature is absent here — the arbitration provisions here are compelled by a statutory regime. There are a number of statutory provisions that involve such compulsory arbitrations.34 Such compulsory arbitrations are expressly contemplated by s 9 of the Arbitration Act 1996.35
32 See David Williams and ors Williams & Kawharu on Arbitration (2nd ed, Lexis Nexis, Wellington, 2017) at [2.4.1]–[2.4.2].
33 See above at [18].
34 A full list of the statutes providing for compulsory arbitrations as at November 2019 is provided in Green & Hunt on Arbitration Law & Practice (online looseleaf ed, Thomson Reuters) at Related Legislation “Provisions for Statutory Arbitration and Dispute Resolution in New Zealand Legislation”.
35 As it was by the legislative predecessor, s 25 of the Arbitration Act 1908.
[40] It has been argued by Associate Professor Kawharu, that a statutory arbitration lacks consent so that it is “questionable whether it really is an arbitration in the true sense”.36 When parties have consented in their contractual arrangements to an arbitral process, recourse to s 11 of the Declaratory Judgments Act 1908 is unlikely to prevent a stay being granted given the overriding importance of party autonomy. When the Courts have exercise discretionary powers in relation to stays in support of arbitral proceedings — for example when disputes are potentially outside the arbitration clause, or involve outside parties, there is still a strong presumption in favour of the arbitral process.37 But when there is no such consent, and the proceedings raise a valid issue of interpretation affecting parties other than those to the particular arbitration, the policy considerations are different. In those circumstances there is a greater public law dimension as the proceedings involve a compulsory process for determining compensation set by the statute, rather than the private law dimension involved when parties choose arbitration in their contract as their preferred method of dispute resolution.
[41] It is also to be remembered that proceedings under the Declaratory Judgments Act 1908 cannot address the full dispute that will be subject to arbitration. It can only address the limited interpretation issues that are properly raised in declaratory judgment proceedings. So, for example, the Van Leeuwen Group’s claim for compensation, and the disputes concerning the details of such claims, must be determined by the arbitration process. The Court is not intervening in the arbitration itself. The declaratory judgment proceedings can only resolve questions of the proper interpretation of the statute relevant not only to the Van Leeuwen Group’s claims, but any other claims.
[42] For these reasons there seems to me good reasons to allow the declaratory judgment proceedings to continue.
36 Amokura Kawharu “Arbitral jurisdiction” (2008) 23 NZULR 238 at footnote 5.
37 Above at [18].
Is there a relevant dispute in relation to two of the issues raised by these proceedings?
[43] The final matter is whether the proceedings should be stayed on the basis that, in relation to two of the issues raised by it, there is no genuine dispute. I accept that is a recognised reason why declarations may not be issued in proceedings under the Declaratory Judgments Act 1908.38
[44] It is plain that there is a material dispute as to interpretation in relation to professional fees in preparing a compensation claim. But the Attorney-General says there is no such dispute in relation to professional consultancy costs incurred in assisting a person to mitigate, or in relation to finance costs. Before me the Attorney- General accepts that such matters are not excluded as a matter of interpretation from the scope of compensation that may be claimed.
[45] Given the Attorney-General’s stance in the argument as revealed by the written submissions filed, Van Leeuwen Group asked that declarations in the form sought by it be made by the Court in this judgment. The Attorney-General said that this was not appropriate given that the matter was not in dispute. This illustrates that the matter may not be as straightforward as it appears.
[46] The Van Leeuwen Group contended in its statement of claim that finance costs and professional consultancy costs were not contemplated as claimable in the Guide, and that consistently with the Guide MPI had not paid to any eligible farmer such categories of compensation. This was denied in the Attorney-General’s statement of defence. Van Leeuwen Group’s affidavits then referred to the Guide, with the deponents going on to say that, to their knowledge, compensation in these categories had not been paid. That evidence was not responded to in the evidence filed by MPI.
[47] Shortly before the hearing, however, in an affidavit dated 9 December 2019 a solicitor from MPI exhibited recent correspondence exchanged between solicitors for the Van Leeuwen Group and the Crown Law Office. In a letter dated 24 October 2019 to Van Leeuwen Group’s solicitors from the Crown Law Office, the Crown Law Office
38 See, for example, Electoral Commission v Tate, above n 18, at [30].
advised that the two relevant declarations were unnecessary because the Ministry had paid interest costs where delays in paying compensation had caused further losses, and had paid for professional fees incurred in order to mitigate losses. On the basis of what Crown Law Office advised in this letter, Ms Aldred submitted that there was no dispute.
[48] I do not accept that that is necessarily the case. The fact that such heads of loss have been accepted may simply reflect that in order to settle more difficult claims such heads of compensation have been paid. But it is still possible that the Ministry has adopted a practice of not allowing such heads of claim, and for the majority of claimants such heads are accordingly not paid. It is true that the evidence that the Van Leeuwen Group has for this being the general approach does not go very far, as it only refers to the deponents’ understanding of the position. But the silence in MPI’s affidavits, and the reliance on the Crown Law Office letter is curious. There may remain utility in the making of declarations so that the position is clear for all those who seek to make compensation claims.
[49] It is also significant that one of the passages of the Guide referred to at paragraph 19 of the statement of claim (and page 13 of the Guide) suggests the non- availability for external consultant costs is not limited to the costs of preparing the compensation claim. The Guide states:
For a Compensation Loss, you may claim for any ‘verifiable loss’ that has occurred as a result of directions given to you by MPI under the Act to manage or eradicate M.bovis. In your situation, you may be able to claim: The cost of repairing/regenerating your damaged pastures (which may include the cost of additional equipment required to repair the damage).
Note: You are unable to claim for paying an external consultant as this is a business decision made you to seek that advice. Employing financial or legal advice services is at your own expense. This also applies to hiring external consultants.
[50] That does not appear consistent with the Attorney-General’s stance taken before me.
[51] In any event there is a more general point. The three declarations sought seem to me to depend on a more important initial question — what is the proper
interpretation of the compensation provisions under s 162A of the Act? There are categories of compensation that may or may not be available once the true interpretation of the section is identified. The categories of compensation may all remain relevant to an understanding of the proper meaning and scope of the compensation provisions. For that reason, once it has been accepted that the first declaration raises a legitimate point of interpretation, it seems to me that all matters related to the correct interpretation should be allowed to proceed.
Conclusion
[52] For the above reasons I dismiss the Attorney-General’s application to strike out, or stay the proceedings on the grounds advanced.
[53] The Van Leeuwen Group is entitled to the costs of this application. My preliminary view is that costs should be awarded on a 2B basis. If the parties are unable to agree I will receive memoranda. Any memoranda seeking costs should be responded to within five working days. Memoranda should be no more than five pages.
[54] The proceedings should now be scheduled for judicial telephone conference. Amongst the issues that may need to be addressed is whether the Attorney-General wishes to file any further affidavit evidence. In addition, and given s 5 of the Declaratory Judgments Act 1908, I ask the parties to consider whether the proceedings should be served on any industry bodies representing potential claimants other than the Van Leeuwen Group. As I have indicated the claim potentially has ramifications beyond its interests, and it may be that industry body should be given an opportunity to participate. In any event I direct the Registrar schedule these proceedings for a judicial telephone conference after consultation with the parties.
Cooke J
Solicitors:
GCA Lawyers, Christchurch for Applicant Crown Law, Wellington for Respondent
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