AIR NEW ZEALAND LIMITED V THE COMMERCE COMMISSION & ors HC AK CIV-2011-404-000802

AIR NEW ZEALAND LIMITED V THE COMMERCE COMMISSION & ors HC AK CIV-2011-404-000802 25 March 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-000802BETWEEN AIR NEW ZEALAND LIMITEDAppellantAND THE COMMERCE COMMISSIONRespondentCIV-2011-404-000820AND BETWEEN AUCKLAND INTERNATIONALAIRPORT LIMITEDAppellantAND COMMERCE COMMISSIONRespondentCIV-2011-485-000249AND BETWEEN WELLINGTON INTERNATIONALAIRPORT LIMITEDAppellantAND COMMERCE COMMISSIONRespondentCIV-2011-485-000251AND BETWEEN CHRISTCHURCH INTERNATIONALAIRPORT LIMITEDAppellantAND COMMERCE COMMISSIONRespondentHearing: 24 March 2011Appearances: J Farmer QC for Air New Zealand LtdA R Galbraith QC and S Katz for Auckland International Airport LtdB Brown QC, M T Scholtens QC and D J Boldt for CommerceCommissionJ Hodder SC for Christchurch International AirportN Wood for Wellington International AirportJudgment: 25 March 2011JUDGMENT OF VENNING JON APPLICATIONS TO ENTER AND REMOVE PROCEEDINGS FROM THE COMMERCIAL LISTThis judgment was delivered by me on 25 March 2011 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Webb Henderson, Auckland (M Toner)Russell McVeagh, Auckland (S Katz)Chapman Tripp, Wellington (J Hodder SC, and N Wood)Commerce Commission, Wellington (R Bernau)Copy to: J A Farmer QC, AucklandA R Galbraith QC, AucklandB Brown QC, WellingtonM T Scholtens QC, WellingtonD J Boldt, WellingtonIntroduction[1] The appellant in each of these cases appeals against the determination of the Commerce Commission in Decision No. 709, the Commerce Act (Specified Airport Services Input Methodologies) dated 22 December 2010. (The airport services appeals).[2] Air New Zealand Limited (Air NZ) and Auckland International Airport Ltd (AIAL) filed their appeals in the Commercial List at Auckland. Christchurch International Airport Ltd (CIAL) and Wellington International Airport Ltd (WIAL) filed their appeals in the Wellington Registry of the High Court.[3] Air NZ and AIAL have filed applications to enter the WIAL and CIAL appeals on the Commercial List at Auckland. WIAL, CIAL and the CommerceCommission have filed applications to remove Air NZ and AIAL's appeals from the Commercial List and for their transfer to the Wellington Registry of this Court.[4] Apart from the airport services appeals, a number of other appeals and judicial review proceedings against input methodologies determinations made by the Commerce Commission concerning other industries have also been filed in the Wellington Registry. These other proceedings (totalling 13 in all) fall into three other categories:(a) Transpower appeal;(b) Electricity industry appeals; and(c) Gas industry appeals.(The electricity and gas services appeals).[5] Powerco Ltd, an appellant in one of the electricity and gas industry appeals, has filed a memorandum seeking to reserve its position in relation to these appeals. Vector Ltd, another appellant in the electricity and gas services appeals, has alsofiled a memorandum for the purposes of this hearing. It confirms that it is neutral as to where the airport appeals are heard. It says its concern that the tribunal hearing its appeals could be influenced by arguments or the judgment in the airport services appeals could be mitigated by separate tribunals hearing the various appeals.Matters of agreement[6] All the appellants to the airport services appeals agree:(a) the airport services appeals should be heard together;(b) the airport services appeals should be heard separately to the electricity and gas services appeals;(c) the airport services appeals could be dealt with within two to three weeks of hearing time (counsel are available in July);(d) once the issue of venue is resolved the airport services appeals should be case managed, heard and a decision delivered as soon as reasonably possible and in advance of the gas and electricity appeals;(e) the airport services appeals should be heard by a differently constituted tribunal to that hearing the electricity and gas services appeals.[7] Mr Brown confirmed the Commerce Commission is happy to support (a) –(d) (it considers three weeks will be required) but supports all the input methodology appeals being heard by the same tribunal.The issue[8] For the airport services appeals to be heard together either the Air NZ and AIAL appeals filed in the Commercial List will have to be removed from theCommercial List and transferred to Wellington or the CIAL and WIAL appeals filed in Wellington will have to be removed from Wellington to the Commercial List.[9] The applications fall to be determined by the Court's assessment of whether the just, speedy and efficient determination of the airport services appeals will best be achieved by management of the appeals in the Commercial List in Auckland or by case management by an assigned Judge in Wellington.[10] Where a proceeding can be assigned to a Judge for management through interlocutory stages to trial, the Commercial List may not offer any particular tangible advantages.1 There is no onus on either side in respect of the applications. The exercise is essentially a balancing one which does not involve a burden on either side.2The Registry positions[11] In anticipation of these appeals being filed administrative arrangements were made in the Wellington Registry for the allocation of a Judge, Clifford J to case manage the input methodology appeals to hearing and for a venue (the former No. 1 Supreme Court) to be made available. If the parties can be ready the airport services appeals could be heard in the third quarter 2011 in Wellington.[12] While it is anticipated Clifford J would manage the input methodologies appeals generally, I understand from his recent minute (No. 4) that he would not be the judicial member for the airport services appeals. It is intended he would hear the electricity and gas services appeals.[13] In Auckland, while the Commercial List Judges have existing commitments, a Commercial List Judge could be made available to manage the files towards a hearing whether or not that Judge ultimately heard the appeal. A courtroom could also be made available in the third quarter for a two to three week hearing.1 Commerce Commission v Cards NZ Ltd & Ors HC Wellington, CIV-2006-485-002535, 30March 2007 at [13].2 Cadbury Ltd & Anor v Effem Foods Ltd (2003) 16 PRNZ 991.The arguments for Air NZ and AIAL[14] Air NZ submits that appeals of this nature have been accepted as quintessentially proceedings of a character for which the Commercial List was intended to cater: Commerce Commission v Cards NZ Ltd & Ors.3 They are expressly provided for by High Court Rule 29.5 and under ss 24B(1)(c) and 24B(1)(g) of the Judicature Act 1908. Air NZ and AIAL are also entitled to apply for the entry of the proceedings filed in Wellington in the Commercial List: High Court Rule 29.5(3) and (4).[15] There is need for a prompt resolution of the appeals. The inputmethodologies apply pending the outcome of the appeals.4 The Commercial Listwill provide not only active case management of the appeals but also the parties willhave access to a larger pool of Judges in Auckland.[16] AIAL submits that the suggested benefit of the management of all the inputmethodology appeals under one Judge's direction will be largely illusory,particularly if the case management of the airport services appeals becomes inextricably intertwined (the entanglement issue) with the case management of the gas and electricity appeals. Such an outcome would lead to unnecessary delay and cost.[17] Further, AIAL submits any potential efficiencies by having one Judge case manage all appeals (even if not sitting on all appeals) will be limited. The combined case management of all input methodology appeals would necessarily involve the Commission and all 17 appellants.[18] AIAL submits that the parties to the electricity and gas appeals are likely to have different views to the appellants to the airport services appeals on:the case management of the files themselves;3 Above n 1 at [12].4 Section 53 Commerce Act 1986.service of documents;the status and rights of parties to be heard on other parties' appeals;the emphasis and contents of the record;issues of consolidation whether formally or informally; andthe appropriate Tribunal to hear the appeals.[19] Even if the case management of the appeals was divided into streams or industry sectors Mr Galbraith submitted the issues would not be overcome. The fact there was one common presiding Judge would inevitably lead to attempts by the parties to influence case management of other industry sector appeals through the formation of common issues. There may also be a conflict for counsel acting for more than one party across industry sectors.[20] On the other hand, if the airport services appeals were managed in the Commercial List at Auckland they could be dealt with separately, on their own merits, and without the distraction of the other electricity and gas services appeals.[21] Both AIAL and Air NZ strongly submit a separate judicial tribunal should ultimately determine the airport services appeals. They say the emphasis and contents of the evidential record in the airport services appeals will be distinct from that relied on in the electricity and gas services appeals.[22] AIAL submits that judicial oversight of all input methodology appeals by one judicial panel would be neither fair nor appropriate (the natural justice issue). AIAL submits that if the airport services appeals are heard in Wellington there is a danger the appeals will be heard sequentially by a single panel and determination of the airport services appeals may be delayed to allow simultaneous issue of judgments.The arguments for CIAL and WIAL[23] Mr Hodder advised that CIAL was almost agnostic on the issue of geography but submitted that there were neither advantages nor efficiencies for either the Court system generally or for the parties in the present appeals being managed separately in the Commercial List in Auckland as opposed to as one separate stream of the input methodology appeals under the management of Clifford J in the Wellington Registry.[24] While accepting that appeals from the Commerce Commission determinations are eligible for entry on the Commercial List he submitted the issue was whether, in the particular circumstances of this case, they should remain there. It was not a question of entitlement.[25] Mr Hodder submitted that once the advantage of the Commercial List for management purposes was set aside, as CIAL submits was the case here, the issue becomes one of cost, convenience and fairness. In relation to that Mr Hodder submitted there may need to be a measure of co-ordinated case management across all industry appeals and it would be useful for there to be some consistency in the approach to setting the appeal record, taking account of the potential for dates for filing submissions and fixtures and various appeals to clash given that some counsel may be acting on appeals in more than one industry.[26] In the round, given the location of the parties, he also submitted it was more convenient and will be overall less costly for the appeals to be case managed and heard in Wellington. He noted the Wellington Registry already has in hand the case management and courtroom facilities.[27] Mr Hodder submitted that given that all the airport appellants wanted the appeals to be dealt with in advance of the electricity and gas services appeals, the problem of appellants in the electricity and gas services appeals feeling disadvantaged and thus feeling obliged to seek to be heard in these appeals could be addressed most effectively by a separate tribunal being convened for the airport appeals. To that extent he supported the position of Air NZ and AIAL. On reflectionhe did not support the suggestion of an embargo on judgment. Neither WIAL nor any of the other airport appellants support a mega trial involving all 17 appellants.[28] For WIAL Mr Wood submitted that it was conceivable parties to the electricity and gas services appeals may apply to intervene and be heard in the airport appeals and any such application would more efficiently and appropriately be determined by the Judge responsible for overall management of the input methodology appeals. The assigned Judge would have familiarity with all the input methodology litigation, and an understanding of the extent to which any aspects of a given appeal may or may not overlap with any other appeal.[29] Mr Wood also noted that Wellington had the advantage of an assigned Judge and a dedicated courtroom facility available. Wellington was also convenient for the majority of the parties.[30] Mr Wood submitted for those reasons there was no particular or practical advantage to the proceedings remaining on the Commercial List.The Commerce Commission position[31] Mr Brown submitted that, from the Commission's point of view, the venue of trial was not particularly relevant, rather the issue was where the proceedings could most efficiently and effectively be case managed and readied for trial. Mr Brown submitted there were two factors in particular that supported the case management of these appeals in Wellington as opposed to the Commercial List in Auckland.[32] The factors were the settlement of the record and the possible intervention of other parties. Appeals against input methodology determinations are by way of rehearing and are conducted solely on the basis of the record: s 52ZA(2). Mr Brown submitted that an important aspect of the decision under appeal, the cost of capital, had been the subject of a workshop where submissions were received from across all sectors including not only airport services, but also the electricity and gas services. He noted for example the same experts appeared at the request of CIAL and Powerco and WIAL and the Electricity Networks Association. He submitted that in thecircumstances the formation of the record for the airport services appeals would be a materially important step in the preparation for hearing, which led him to his second point. Mr Brown submitted that any application by electricity and gas services appellants to intervene in the airport services appeals, on the basis of their interest in the cost of capital issue, would be most efficiently determined by the one Judge, who had the broader perspective of the management of all the input methodology appeals.[33] Mr Brown also submitted that even if the proceedings remained in Auckland that would not prevent the applications for joinder or for party status by others but the Judge in Auckland would be at somewhat of a disadvantage as he or she would not have the ability to consider the matter overall.[34] Mr Brown accepted there was no presumption the same tribunal would hear all the appeals although that was a position the Commission favoured. He noted that in his recent minute Clifford J had confirmed that if the airport appeals were ready for hearing early in the third quarter then a fixture presided over by a Judge other than Clifford J could be accommodated in Wellington.Decision[35] The decision on these applications is a finely balanced one. The appeals are expressly recognised as proceedings which can be determined in the Commercial List. But where a proceeding is assigned to a Judge for management through the interlocutory stages to trial, as all parties agree should happen, and for which arrangements have been made in Wellington, there is no reason to consider the Commercial List will offer any tangible advantages in relation to the management of the appeals.[36] The convenience of the parties and counsel is, in context, a relatively minor issue. There are three parties whose counsel are based in Wellington. HoweverWIAL and CIAL's solicitors have offices in Auckland. The Commerce Commission is based in Wellington. There are two parties whose counsel are based in Auckland. Overall the convenience of counsel and the parties just favours Wellington, but it is not a particularly persuasive factor.[37] In terms of administrative convenience there is a Judge available in Wellington with time in his programme to actively case manage these files and a Court available to hear the appeals in the third quarter. With the existing commitments of Commercial List Judges in Auckland one is not presently available although the rosters could be changed and one made available to manage these files. Again a courtroom is presently not available for a two to three week fixture in the third quarter, but one could be made available if necessary. The matter is effectively neutral from the point of view of court resources.[38] In my view the most significant factor is whether there is force in MrGalbraith's submission that, if managed in Wellington, there is a danger these airport services appeals will become entangled with the general management of the other gas and electricity appeals so that the current appellants will be disadvantaged or whether, by contrast, as submitted by Mr Brown and Mr Hodder in particular, there will be advantages in having all the input methodology appeals case managed by the same Judge.[39] The starting point is that the 13 other input methodology appeals, the electricity and gas services appeals, will be managed in Wellington by Clifford J.[40] While the case management required to ready the airport services appeals for hearing will be limited, in my view there will be certain issues in relation to which it would be helpful for the one Judge to have an understanding of the overall picture involving all input methodology appeals, in particular, when settling the record for the airport services appeals, and when determining whether an intending intervenor should be granted party status. In settling the record, a Judge with an overall view would have an advantage given the overlap with other appeals on the cost of capital issues. Further, on any application for party status it would be helpful for the Judge to have an overall understanding of the appeals to determine if the applicant could be said to have a significant interest in the appeal. While I acknowledge the interpretation of s 52Z(1) that Mr Farmer argued for, I understand that other parties did give views on the cost of capital which forms an important part of the airport services determination.[41] That overall view and understanding would not be available to a Commercial List Judge in Auckland.[42] AIAL and Air NZ's concern that they would become entangled in the other sector appeals could readily be addressed by the Judge managing the different sector appeals in separate streams. Even with the proceedings under the control of one Judge in Wellington there would be no reason for the airport appellants to be involved in conferences relating to the gas and electricity appeals or vice versa. Separate streams for management purposes could be established, and indeed may well be necessary to achieve a July fixture for these appeals.[43] That leaves the natural justice point. In my judgment it is a neutral factor. If the airport services appeals can be heard first, as all appellants agree is desirable, and a decision delivered shortly thereafter as is now accepted is appropriate, the concern about a tribunal having already made its mind up arises in relation to the appellants to the electricity and gas services appeals rather than the present appellants. However, as is noted in the Powerco memorandum, any such concern can be addressed in large part by the constitution of separate tribunals for the airport services appeal and subsequent appeals. I note in a recent minute Clifford J has expressly acknowledged that. The Judge confirmed that a different Judge, not him, could hear the airport services appeals. It should also be possible as a matter of administration to ensure that different and other independent members of the panel sit on the later electricity and gas services appeals.Result[44] As I have noted the matter is finely balanced. However, in my view the balance does favour these four appeals being managed by the assigned Judge in Wellington, who has overall management of the input methodology appeals. I make an order accordingly removing the Air NZ and AIAL appeals from the Commercial List and transferring them to the Wellington Registry for hearing. I dismiss Air NZand AIAL's applications for removal of the CIAL and WIAL appeals to the Commercial List.Parties to appeals[45] Given the common interest each of the parties to the airport services appeals has in the appeals lodged by the others, it is convenient to record counsels'agreement that the appellants in each case may be confirmed as parties to each of the other airport services appeals. I order that the appellant in each of the four airport services appeals is to be a party to each of the other airport services appeals.Costs[46] Costs should follow the event. The appeals should be classed as category 3. The appropriate time band for these applications is B. I make an order for costs in favour of the Commission, CIAL, and WIAL accordingly. I do not certify for second counsel.Review[47] The Registrar at Wellington should, after consultation with Clifford J, arrange a further pre-trial conference on these appeals.__________________________ Venning J