Vector Limited v Electricity Authority - [2017] NZHC 1774

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2016-485-702 [2017] NZHC 1774

BETWEEN
VECTOR LIMITED

First Plaintiff

AND

PAUL HUTCHISON, WILLIAM CAIRNS, JAMES CARMICHAEL, KAREN SHERRY AND MICHAEL BUCZKOSKI

Second Plaintiffs

AND

THE ELECTRICITY AUTHORITY Defendant

Hearing: 23 - 24 May 2017

Counsel:

J A Farmer QC and S M Hunter for First Plaintiff
D R Bigio QC for Second Plaintiff
A R Galbraith QC and L OʼGorman for Defendant
D Laurenson QC and J L W Wass for Commerce Commission

Judgment:

31 July 2017

JUDGMENT OF SIMON FRANCE J

Introduction

[1] The Electricity Authority (the Authority) is established by the Electricity Industry Act 2010 (the Act).1 Its role is to make and administer the Electricity Industry Participation Code 2010 (the Code), to monitor compliance with that Code
and to enforce it.

1 Electricity Industry Act 2010, s 12.

VECTOR LTD v HUTCHISON, CAIRNS, CARMICHAEL, SHERRY AND BUCZKOSKI [2017] NZHC 1774 [31 July 2017]

[2] Recently the Authority has announced proposed changes to the Code that will impact upon the contracts that are entered into between distributors and retailers. In brief, distributors own the power lines. Retailers must enter into agreements with them to use the distributor’s network in order to get the electricity to their customers. These agreements are known in the industry as Use-of-System Agreements (UoSAs).

[3] From the distributor’s viewpoint, the Authority’s proposals mean that the content of much of these agreements will be set and made mandatory by the Authority unless the retailer agrees to different provisions. The parties are at odds over the extent of this mandatory component (Vector says all of it is mandatory) but it is common ground that as a consequence of these new proposals, if implemented, significant portions of the contracts will be fixed. Indeed, that is the purpose of the exercise, as the Authority wants these agreements to be standardised.

[4] The process is at the proposal stage, albeit there has previously been considerable consultation, and the matter is well advanced. In these proceedings Vector seeks declarations aimed at stopping the current proposal before it gets any further. Vector has two primary propositions:

(a) the Authority has no power to interfere with freedom of contract in this way; or, alternatively

(b)if it does have some power to do that, the proposed content of these changes is outside the matters the Authority can prescribe. Rather, the subject matter falls within the exclusive domain of the Commerce Commission. (The Commission appears to say it disagrees with that.)

[5] Vector is supported in its argument by the trustees of Entrust. Entrust owns three quarters of Vector. It distributes its income to consumers, and is concerned the proposed changes will prevent it doing so (by limiting Vector’s ability through the UoSA to obtain information for Entrust).

Further background

[6] There has for some time been a push for the UoSAs between distributors and retailers to be standardised. Regulators have sought to achieve it by promulgation of model agreements which it was hoped…

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.

Continue reading Vector Limited v Electricity Authority

Details

AGLC: Vector Limited v Electricity Authority [2017] NZHC 1774
Case: [2017] NZHC 1774
Decision Date: 31 July 2017

CaseChat Overview and Summary

Vector Limited and five second plaintiffs sought declarations that the Electricity Authority lacks the power to amend the Electricity Industry Participation Code to require distributors to offer default Use-of-System Agreements (UoSAs) containing core terms prescribed by the Authority. The Authority opposed the application. The plaintiffs claimed the Authority's proposals would interfere with freedom of contract, and that the Authority had no power to interfere with such freedom. The plaintiffs further submitted that the subject matter of the proposed changes fell within the exclusive domain of the Commerce Commission. The Authority submitted that the plaintiffs' arguments were not supported by the text of the legislation and the context of the statutory scheme. The Court declined the plaintiffs' application. The Court found the statutory scheme and context made it clear the Authority had the power to dictate the terms of the UoSAs. The Court found the plaintiffs' submissions that there was a presumption that clear words were required before a statute would be read as limiting parties’ right to freedom of contract were not supported by the authorities or by New Zealand law. The Court found the plaintiffs' submissions that the proposed changes fell within the exclusive domain of the Commerce Commission were not supported by the authorities or by the statutory scheme and context. The Court found the Authority and the Commerce Commission had complementary roles in regulating the electricity industry.

Orders