Personalised Plates Limited v New Zealand Transport Agency [2013] NZHC 1927 (1 August 2013)

Last Updated: 20 August 2013

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-002959 [2013] NZHC 1927

BETWEEN PERSONALISED PLATES LIMITED Plaintiff

AND NEW ZEALAND TRANSPORT AGENCY

Defendant

Hearing: 12 July 2013

Counsel: RG Simpson and TW Geuther for Plaintiff

DA Campbell for Defendant

Judgment: 1 August 2013

_{JUDGMENT OF ASHER J}

This judgment was delivered by me on Thursday, 1 August 2013 at 3.30pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Bell Gully, Auckland.

Kensington Swan, Auckland.

PERSONALISED PLATES LTD v NZ TRANSPORT AGENCY [2013] NZHC 1927 [1 August 2013]

Introduction

[1] This is an application to remove this proceeding from the commercial list and to transfer it from the Auckland registry to the Wellington registry. It is submitted by the defendant that the plaintiff was in error in filing the proceeding on the Auckland commercial list as in essence it is an administrative law proceeding. It submits that the defendant has its principal place of business in Wellington, and no material part of the causes of action arose in Auckland.

[2] The proceeding arises from a contract entered into on 25 August 2008 (the

2008 contract) between New Zealand Transport Agency (NZTA) and Personalised Plates Ltd (PPL), which replaced an earlier agreement dated 3 June 1997. By that agreement, NZTA granted PPL sole and exclusive rights to market and promote personalised plates and associated products throughout New Zealand for an unlimited period. It was stated that the parties acknowledged it was their intention that the agreement should continue indefinitely, subject to various rights of termination for cause. PPL was to pay NZTA $400,000 per annum and in addition a significant portion of the gross revenue for sales exceeding $4 million.

[3] In a process that the plaintiff asserts went back to 2007, Parliament on

25 June 2009 enacted the Land Transport Amendment Act 2009. By s 259, the 2008 contract was made terminable upon reasonable notice, notwithstanding the 2008 indefinite term of the contract. On 21 December 2010, NZTA indicated that PPL could expect to receive one year’s notice of termination. By letter of 25 February

2013, NZTA notified PPL that the contract was terminated with effect from

31 March 2014, and that NZTA intended to carry out a fully competitive tender for the provision of personalised plates services. This led to PPL issuing these proceedings.

[4] The statement of claim lists judicial review as its first “cause of action”. It alleges an irrational and unreasonable decision to terminate on 13 months’ notice without paying compensation. It is asserted that the Crown, by its actions, intends to appropriate PPL’s assets for no consideration. It is claimed that there is no reasonable or proper purpose or rationale for NZTA’s decision. The relief sought is a

declaration that NZTA may not terminate the contract other than for cause or on condition of payment of compensation, an order quashing the NZTA’s decision to serve the termination notice without paying compensation, and a permanent injunction.

[5] The second cause of action pleads on the basis of judicial review that a reasonable notice to terminate under s 259 would provide at least 10 years’ notice. It is alleged therefore that NZTA’s decision to issue the termination notice without paying compensation was made on the basis of an error of law.

[6] The third cause of action is breach of contract. It is alleged that there is a perpetual term in the contract, and reasonable notice under s 259 would be at least 10 years’ notice. It is asserted that the termination notice was a repudiation of the 2008 contract, and a declaration is sought to that effect together with damages for breach of contract (if it takes place) and a permanent injunction.

[7] The fourth cause of action is for the common law right to compensation for expropriation, and refers to an implicit or statutory right to compensation or restitution.

[8] There can be no doubt that the first, second and fourth causes of action have an administrative law base. The third cause of action is pleaded in contract, but relies on the statutory provision of the new s 259 and imports it into the contract alleging a breach of the reasonable notice provision.

Should this proceeding be on the commercial list?

[9] Rule 29.13(1) of the High Court Rules provides that a commercial list Judge may, on the application of any party or on the Judge’s own initiative, remove a proceeding from the commercial list. The provision does not set out any guide as to how the discretion is to be exercised. On its face it is unfettered. Rodney Hansen J observed in Cadbury Ltd v Effem Foods Ltd1 that ultimately there is a balancing

_{exercise to be conducted which does not involve a burden on either side. The central}

1 Cadbury Ltd v Effem Foods Ltd (2003) 16 PRNZ 991 (HC) at [14].

issue is whether the proceeding is indeed eligible for the commercial list under s 24B.

Section 24B

[10] The general criteria for eligibility to be placed in the commercial list are set out in s 24B(1) of the Judicature Act 1908:

24B Proceedings eligible for commercial list

(1) The classes of proceedings eligible for entry on a commercial list are as follows:

(a) Any proceedings arising out of or otherwise relating to:

(i) The ordinary transactions of persons engaged in commerce or trade or of shippers:

(ii) The carriage of goods for the purpose of trade or commerce: (iii) The construction of commercial, shipping, or transport

documents:

(iv) The export or import of merchandise:

(v) Insurance, banking, finance, guarantee, commercial agency, or commercial usages:

(vi) Disputes arising out of intellectual property rights between parties engaged in commerce:

...

[11] Mr Simpson for the plaintiff relied primarily on s 24B(1)(a)(i), although reference was also made to s 24B(1)(a)(v). The latter reference can be disposed of immediately. This is not in my view a contract of commercial agency. There was not an agency agreement in the usual sense, where a principal and agent relationship was established. If it deserved any categorisation, it would be as a type of exclusive marketing and distribution agreement.

[12] Returning to s 24B(1)(a)(i), in assessing what is an “ordinary transaction” or persons engaged in commercial trade, it is necessary to look at the nature of the underlying transaction. This follows from the use of the words in s 24B(1)(a) “...

arising out of”.2 The fact that the events complained of in respect of the underlying transaction might be extraordinary or infrequent does not mean that the proceeding loses the commercial flavour required by s 24B(1). It will often be the case that the particular nature of a breach of a commercial transaction will be a one-off or extraordinary circumstance.

[13] In my view the underlying agreement, which was for the distribution and marketing of consumer goods, albeit from a government agency, was an ordinary commercial transaction.

[14] Mr Campell for the defendant relied on the statement in Insignia International Ltd v Gulf Star Products Ltd that for a case to remain on the list if an application is made for its removal “... the case should exhibit some commercial flavour over and above the normal commercial and contractual litigation which forms part of the standard diet of the Court.”3 It is also suggested in that case that

there needed to be a “superadded commercial flavour”.4

[15] This sort of phraseology is not to be found in the very considerable number of cases dealing with the discretion, and with respect I do not find it helpful. As Barker J said in Taspac Oysters Ltd v James Hardie & Co Pty Ltd:5

The test for eligibility in the List has been stated many times ..., i.e. does the proceeding have a sufficient “commercial flavour” to come within the general purpose and intendment of the legislation.

This phrase “sufficient commercial flavour” has been frequently used and warrants

no further adjectival refinement.6

[16] In my view the underlying transaction in this case has a distinct commercial flavour. It was a significant transaction between a commercial party and a

_{government agency that entered into the contract for commercial purposes. If there}

2 _{See Securities Commission v Midavia Rail Investments [2005] 3 NZLR 433 (CA).}

3 _{Insignia International Ltd v Gulf Star Products Ltd (2000) 14 PRNZ 357 at [9].}

4 _{At [13].}

5 _{Taspac Oysters Ltd v James Hardie & Co Pty Ltd [1990] 1 NZLR 442 (HC) at 445.}

6 See Allied Nationwide Finance Ltd (in receivership) v Southland Building Society HC Auckland

CIV-2010-404-008228, 19 August 2011 at [12].

had been an ordinary dispute as to its terms or the case centred on an alleged breach of its terms, I would consider that it qualified for the commercial list.

The judicial review aspect

[17] However there is a complication. These proceedings are primarily of a public law nature. As I have said, the first, second and fourth causes of action turn on judicial review or breach of public duties. The third cause of action, while ostensibly based on contract, relies on the new s 259 inserted by the Land Transport Amendment Act 2009.

[18] Mr Campbell submitted that the proceeding’s judicial review character made it ineligible for the commercial list. He relied on a line of cases that he submitted indicated judicial review proceedings were not suited to the commercial list.

[19] In Auckland Electric Power Board v Electricity Corporation of New Zealand Ltd Barker J, considering proceedings relating to a written agreement for the bulk supply of electricity which included a claim for judicial review stated:7

This is a Commercial List case and administrative law cases are rarely appropriate on the List. I have wide powers to regulate the business on the Commercial List and give directions as to the speedy and inexpensive determination of the real questions between parties to proceedings entered on the List (See S.24D of the Judicature Act 1908). The existence of a judicial review cause of action with its special procedural requirements will retard the speedy and inexpensive determination of what is essentially a contractual dispute between the parties.

Accordingly, I strike out this cause of action from the Commercial List proceedings but without prejudice to the right of the plaintiff to bring separate judicial review proceedings should its Commercial List proceedings fail. ... Most of what would be achieved by the plaintiff under judicial review seems achievable under the existing causes of action.

Similar views were expressed in relation to judicial review proceedings through the

_1990s.8

7 Auckland Electric Power Board v Electricity Corporation of New Zealand Ltd [1993] 3 NZLR

_{53 at 61.}

8 WEL Energy Group Ltd v Bethune HC Auckland CL 50/95, 31 January 1996; and Clear

Communications Ltd v Commerce Commission (1996) 9 PRNZ 678 (HC) at 679.

[20] Since these authorities there have been some practical changes to the way in which the High Court lists are operated. There is now a full case management system for ordinary proceedings, involving case management conferences.9 Also, judicial review proceedings are now listed in Duty Judge lists in the High Court so that they can be dealt with quickly and on a weekly basis.

[21] Nevertheless, it is still difficult today to see why an application for judicial review, with its special procedural requirements, will be better served in the commercial list. The Duty Judge list where civil matters are called three times a week, rather than once a week as on the commercial list, has greater flexibility. Where, as here, the complaints have a public law genesis, the issues to be determined have no particular commercial flavour.

[22] Therefore, in my view where a proceeding is primarily concerned with judicial review it is best treated that way and not filed in the commercial list. I accept that this could be seen as inconsistent with the statement of the Court of Appeal in Securities Commission v Midavia Rail Investments in relation to “the

underlying transaction”, where it was said:10

In substance, the Commission is submitting that, if its allegations are proven, then the conduct is to be categorised as insider trading, which is, so it is said, infrequent, and therefore the proceeding does not relate to or arise out of ordinary transactions of persons engaged in commerce. But what must be looked at is the nature of the underlying transaction. In the present case, the impugned share trades are, on their face, entirely ordinary transactions by persons in commerce. Whether they amount to insider trading remains to be proved: that is the issue in the proceeding. One cannot at this stage assume that the Commission will be able to substantiate its allegation and on that assumption rule the proceeding ineligible for entry.

[23] However, that was not a judicial review proceeding. Furthermore, the alleged insider trading, while not ordinary, took place within the context of the trading of shares of a publicly listed company, which undoubtedly had a commercial flavour. While in this case the 2008 agreement is, I accept, the underlying transaction, that underlying transaction from the point of view of the parties has been supplanted by

_{an act of government which is now being challenged. This case is all about that}

9 _{High Court Rules, pt 7. Specifically, see rr 7.1–7.2.}

10 Securities Commission v Midavia Rail Investments, above n 2, at [31].

government act. The sole reference to breach of contract in itself turns on an aspect of that governmental intervention. From a judicial review perspective, the issues are not commercial, but rather whether as pleaded there has been unreasonable and irrational government action, and an expropriation of PPL’s contractual rights and goodwill. The underlying public law nature of the dispute is demonstrated by the reliance on the Magna Carta, and the Universal Declaration of Human Rights.

[24] Thus, in this case the underlying transaction has been effectively superseded by government action that is now the subject of challenge. The case does not in my view therefore have the requisite commercial flavour.

[25] Therefore in the absence of any other relevant factors, I would grant this application and remove this proceeding from the commercial list.

Should this proceeding be in Auckland or Wellington?

[26] The High Court Rules contain a specific provision relating to the filing of causes of action. Rule 5.1(1)(c) provides:

5.1 Identification of proper registry

(1) The proper registry of the court, for the purposes of rules 5.25 and

19.7, is,—

(a) when a sole defendant is resident or has a principal place of business in New Zealand, the registry of the court nearest to the residence or principal place of business of the defendant, but when there are 2 or more defendants, the proper registry is determined by reference to the first-named defendant who is resident or has a principal place of business in New Zealand:

...

(c) when the Crown is a defendant, the registry nearest to the place where the cause of action or a material part of it arose:

[27] However, r 5.1(1)(c) must be read with ss 10(1) and (2)(g) of the Judicature Amendment Act 1972 pertaining to judicial review proceedings. Sections 10(1) and (2)(g) provide:

10 Powers of Judge to call conference and give directions

(1) For the purpose of ensuring that any application or intended application for review may be determined in a convenient and expeditious manner, and that all matters in dispute may be effectively and completely determined, a Judge may at any time, either on the application of any party or intended party or without any such application, and on such terms as he thinks fit, direct the holding of a conference of parties or intended parties or their counsel presided over by a Judge.

(2) At any such conference the Judge presiding may—

...

(g) Fix a time and place for the hearing of the application for review. (emphasis added)

[28] The approach to these two sections is now well settled.11 The effect of s 10(2)(g) is to permit the Court to take a somewhat broader approach to the issue of venue than that historically made in respect of inter-party disputes pursuant to the other jurisdictions of the Court. However, r 5.1 remains a guide.

[29] Here the defendant’s principal place of business is Wellington, and a material part of the cause of action arose in Wellington.

[30] I do not propose traversing the authorities on the meaning of “part of the cause of action”. These have been considered elsewhere.12 I respectfully adopt the observations of McGechan J in National Bank of New Zealand Ltd v Glennie:13

A cause of action is an assembly of facts which entitles a plaintiff to relief (including discretionary relief). The meaning of “part” of a cause of action is self-evident accordingly. However, the mere circumstance of being “part” of a cause of action will not suffice in itself. The policy in r 107 is to exclude merely trivial parts, conferring rights only where the part cause of action concerned is “material”. The distinction is one of degree, looking to relative significance in the context of the particular claim. In a r 107 context, the assessment is to be made on the basis of the statement of claim, as filed. One looks to the allegations, in so far as components of the cause of action, as so made, to determine such “materiality”.

11 For a discussion see K v Chief Executive of the Department of Labour of Wellington (2009)

_{[2009] NZHC 1512; 19 PRNZ 222 (HC) at [3]–[10].}

12 _{At [3]–[10].}

13 National Bank of New Zealand Ltd v Glennie (1992) 6 PRNZ 292 (HC) at 294.

I accept the often quoted statement of Quilliam J in Colman v Attorney-General14 in

a similar context of “material” being “pertinent, germane or essential to”.

[31] The authorities relating to venue, where a cause of action is based on judicial review or administrative act were reviewed in K v Chief Executive of the Department of Labour of Wellington.15 It was noted there in relation to two causes of action relating to matters in Auckland that:16

In judicial review the focus is on the procedures of the decision-maker and the lawfulness of the decision itself. Here the causes of action do not focus on the lead-up procedures, but rather on the lawfulness of the Minister’s decision. Indeed, the procedures leading up to that decision are not criticised, and there is no criticism of any step taken in Auckland. Therefore, no step or circumstance in Auckland will be of key pertinence in considering the first two causes of action. If there were only the two causes of action, it would be difficult to say that a material part of them arose in Auckland, although it is not necessary for me to express a firm conclusion on this point.

(emphasis added)

[32] However, elements of a third cause of action that did involve a detailed consideration of circumstances that arose in Auckland qualified as a “material part” arising in that centre. It is clear that the making of an administrative decision in Wellington is not determinative of where the application for review must be heard. When a finding of fairness or lawfulness in judicial review involves an evaluation of a significant issue of fact which arises in a certain registry area, a material part of

that cause of action can be said to arise in that area.17

[33] In Criminal Bar Association of New Zealand Inc v Attorney-General it was observed that there was no basis for finding that a material part of the cause of action arose “... at every place where any of the decisions challenged may have practical effect or application”.18 The fact that a decision may affect people in all parts of New Zealand does not qualify all centres as places where a material part of the cause

_{of action arose.}

14 _{Colman v Attorney-General (1978) 3 PRNZ 577 (SC).}

15 _{K v Chief Executive of the Department of Labour of Wellington, above n 11, at [20]–[21].}

16 _{At [22].}

17 _{At [24].}

18 Criminal Bar Association of New Zealand Inc v Attorney-General [2012] NZHC 400, (2012) 21

PRNZ 221.

[34] In this case, none of the causes of action focus on any of the administrative procedures or acts in Auckland. However, it was argued here by Mr Simpson that while the impugned administrative decision was made in Wellington, PPL’s judicial review causes of action arose in Auckland because the NZTA office that sent the termination notice was based in Palmerston North and not Wellington, and sent to Auckland. That may be so, but these are not factors of key pertinence to the claim. He also argued that PPL’s business, which is based in Auckland, would be in effect expropriated and destroyed by the NZTA action. He also notes that because compensation would be payable to PPL in Auckland, the financial affairs and business activities of PPL were planned in Auckland, and any legitimate expectation on PPL’s part arose in Auckland, Auckland was a suitable venue.

[35] While PPL’s business is based indeed in Auckland, it is a New Zealand-wide business, with personalised plates being distributed throughout the country. In most cases a plaintiff will be based in a particular centre, and therefore its personal loss will be focused on that centre. However, more is required before it can be concluded that a material part of the cause of action arose in that centre. There must be a step or circumstance in the causes of action that arose in Auckland of key pertinence, and I am unable to see one. The loss of business will be New Zealand-wide.

[36] Thus, I am unable to see how a material part of the cause of action arose in Auckland. The case is to be distinguished from the third cause of action in K v Chief Executive of the Department of Labour of Wellington where particular events that took place in Auckland would be the subject of close scrutiny by the Court and relevant to proving a cause of action. Similarly the case of Auckland Harbour Board

v Belgrave19 relied on by Mr Simpson, where a boat that was the subject matter of

the claim was imported into Auckland, is distinguishable. Events essential to the claim took place in that centre.

The Court’s discretion

[37] I have concluded that this proceeding should not have been filed on the commercial list, and also that it should not in any event have been filed in Auckland.

19 Auckland Harbour Board v Belgrave HC Auckland CP 423/87, 14 August 1987.

[38] The Court has a general discretion under s 10(2)(g) to fix the time and place for the hearing of an application for review. Moreover, under r 5.1(5):

5.1 Identification of proper registry

...

(5) If it appears to a Judge, on application made, that a different registry of the court would be more convenient to the parties, he or she may direct that the statement of claim or all documents be transferred to that registry and that registry becomes the proper registry.

[39] Further, the power under r 5.1(4) to direct a statement of claim to be transferred if that claim has been filed in the wrong registry is again a discretionary power. The word used is “may”. Finally, I note that under r 29.13 which provides for removal from the commercial list, the power is again expressed in discretionary terms.

[40] There can be no doubt therefore that notwithstanding finding as I do that this proceeding should not have been filed on the commercial list, or in Auckland, I nevertheless retain a general discretion as to whether I transfer the proceeding or not.

[41] The case at present has a fixture in Auckland on 18 November 2013 for four days. The issues that arise are urgent. The plaintiff is seeking, amongst other things, permanent injunctive relief. It seems plain that the release of a judgment determining issues prior to 31 March 2014 is desirable, avoiding as it will a possible application for an interim injunction. An early decision will resolve uncertainty and the prospect of goodwill being damaged, and hopefully enable the parties to move forward.

[42] I have made inquiries of the List Judge in Wellington. Unfortunately there is no four day fixture available this year at that registry. If I transfer the proceedings to Wellington this would certainly cause delay, and is likely to add to expense and inconvenience. I note that in other respects matters of convenience are equally balanced, with the parties’ lawyers being based in Auckland and Wellington respectively. It is unlikely that there will be witnesses called for cross-examination.

[43] I have therefore decided in my discretion that although the defendant has succeeded in its substantive arguments, I will nevertheless refuse its application to transfer the proceedings to Wellington. To do this will promote the objective of the High Court Rules, which is to secure the just, speedy and inexpensive determination of any proceeding. That result is somewhat unjust to the defendant, but I consider the need for a speedy hearing to outweigh that injustice. I will also leave the proceeding on the commercial list, as commercial list Judges are now familiar with it.

[44] However, the proceedings should not have been filed either in the commercial list or in Auckland. They should have been filed in the Wellington registry and dealt with as a judicial review application in that city. Therefore, I propose ordering costs on this application in favour of the defendant.

[45] I have considered whether I should order costs beyond the scale to signify the Court’s strong disapproval of proceedings being filed in the wrong registry. If they had been filed in the right registry it is likely that an urgent fixture could have proceeded in Wellington this year. A fixture would have been allocated some months ago.

[46] I have decided in this instance not to take that further step as I do not think that the filing was carried out in a deliberate or cynical attempt to sidestep the rules.

Result

[47] The application is dismissed and the fixture for 18 November 2013 (four days) at Auckland confirmed.

[48] The defendant, although ultimately unsuccessful, is entitled to costs which are to be paid by the plaintiff and calculated on a 2B basis.

...................................

Asher J