ANZ SKY TOURS LIMITED v NEW ZEALAND TOURISM BOARD TRADING AS TOURISM NEW ZEALAND [2019] NZHC 925

ANZ SKY TOURS LIMITED v NEW ZEALAND TOURISM BOARD TRADING AS TOURISM NEWZEALAND [2019] NZHC 925 [30 April 2019]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2017-485-944[2019] NZHC 925BETWEEN ANZ SKY TOURS LIMITEDApplicantAND NEW ZEALAND TOURISM BOARDTRADING AS TOURISM NEWZEALANDRespondentHearing: 12 – 13 November 2018Appearances: J R Billington QC and L George for the ApplicantL Clark and B A Mathers for the RespondentJudgment: 30 April 2019JUDGMENT OF CULL JTABLE OF CONTENTSIntroduction [1]The issues [5]Summary [6]The events leading to Tourism NZ's recommendation [7]The Arrowtown incident [11]The parties' communications from midnight 14 March 2017 [14]Tourism NZ's status [24]The ADS system and the Code of Conduct [25]Tourism NZ's response to Donghu's complaints [34]Tourism NZ's decisions [36]Issue 1 – Are Tourism NZ's decisions reviewable? [41]Legal principles [47]Discussion [53]Conclusion [60]Issue 2 – Are there grounds to judicially review the decision? [61]Mistake of fact [64]Legal principles [66]Discussion [68]Conclusion [76]Breaches of natural justice [78]Failure to investigate [85]Failure to consider all facts [99]Failure to disclose information [111]Failure to give reasons for revocation [118]Conclusion [125]Unreasonableness/Proportionality [129]Legal principles [131]Discussion [141]Conclusion [150]Issue 3: What remedy, (if any), is appropriate? [151]Relief [152]Costs [154]Introduction[1] ANZ Sky Tours Limited (Sky Tours) is accredited as an inbound tour operatorto conduct tours in New Zealand for Chinese tourists. The accreditation is importantto its reputation and commercial standing. It has been marketing and selling NewZealand tourism products and services to Chinese visitors since 2000.1 Since 2006 ithas been operating in Australia as well as New Zealand and the South Pacific. Onlyapproved New Zealand inbound tour operators who hold the accreditation can operatetours for Chinese tourists who travel to New Zealand under Approved DestinationStatus (ADS) visas. Tourism New Zealand (Tourism NZ) manages and oversees theADS accreditation system. Only 37 tour operators are approved.[2] In 2017, Tourism NZ recommended to the Chief Executive of the Ministry ofBusiness, Innovation and Employment (MBIE) that Sky Tours' ADS accreditation berevoked for breaches of the Code of Conduct.2 If its ADS accreditation were revoked,Sky Tours would not be permitted to operate tours for Chinese ADS visa travellers.[3] Sky Tours claims that Tourism NZ made reviewable errors in the course ofmaking three decisions, when it concluded that Sky Tours was in serious breach of the1 Sky Tours was incorporated in New Zealand and registered with the Companies Office Registeron or about 18 January 2000. From about January 2000, Sky Tours has marketed, promoted andsold a range of New Zealand tourism products and services to the Chinese visitor market. Thishas included organising grand tours, cruises, educational visits, events, conventions and meetings.2 Tourism NZ is responsible for administering the ADS scheme, including enforcing the Code ofConduct: China ADS Approved Inbound Tour Operators and Tour Guides.Code of Conduct and recommended revocation of its ADS accreditation. Sky Tourssays these decisions and consequent recommendations are judicially reviewable andshould be quashed, and Tourism NZ be directed to reconsider the matters.[4] Tourism NZ opposes the application for judicial review and raises thepreliminary issue of whether its decisions, which they say are preliminary andrecommendatory only, are amenable to judicial review.The issues[5] The issues raised in this application are:1. Are Tourism NZ's decisions reviewable?2. Are there grounds to judicially review the decisions?- were there mistakes of fact and did the process breachnatural justice; and- was the decision unreasonable, disproportionate, and/orsubstantively unfair.33. If so, what remedy (if any) is appropriate?Summary[6] I have found that the final recommendation decision made by Tourism NZ isreviewable. I have also found that Tourism NZ made reviewable errors in making thatdecision and recommendation to revoke Sky Tours' ADS accreditation. Those errorsare:(a) Breaches of natural justice. Tourism NZ failed to investigate andconsider all the facts, made mistakes of fact, failed to disclose theoriginal complaints to Sky Tours, and failed to give reasons for itsrevocation recommendation.3 Sky Tours initially alleged bias and predetermination, but this was not pursued at the hearing.(b) Disproportionate penalty. Tourism NZ's revocation recommendationwas disproportionate in the circumstances.The events leading to Tourism NZ's recommendation[7] In late 2016, Sky Tours entered into a commercial relationship with a China-based travel seller, Shanghai Donghu International Travel Agency (Donghu),appointing Sky Tours to act as Donghu's New Zealand ADS-approved operator. Underthe written agreement for services, Sky Tours would, amongst other things, book andarrange New Zealand land tour components for tour groups promoted and booked byDonghu, including travel coaches, accommodation, meals and tour guides. Donghuwas required to pay a fee for these services. Up until March 2017, Sky Tours organisedand ran 49 successful tours for Donghu.[8] This case involves tour group 0310D (the tour group). Donghu contracted SkyTours to be the tour group's inbound tour operator. Sky Tours was, therefore, the ADS-approved operator arranging and managing the tour.[9] On 11 March 2017, the tour group arrived in New Zealand for a nine-day tour.The tour included a stop-over in Queenstown, scheduled for three nights from 13March 2017. Ms Liu was the appointed tour guide to accompany the tour group. MsLiu was a contractor for Sky Tours and was herself an ADS-approved tour guide. Thetour group also travelled with a Chinese speaking tour guide, Ms Wang. Ms Wangtravelled with the group to and from China. She was employed by Donghu and is notADS approved.[10] On 12 March 2017, the tour group was scheduled to stay at the Kingsgate Hotelin Greymouth. When the group arrived, the hotel did not have any rooms availableand Sky Tours had to, and did, arrange alternative accommodation.The Arrowtown incident[11] On the afternoon of 13 March 2017, the tour group was scheduled to spendapproximately 30 minutes in Arrowtown, with one and a half hours scheduled for thedrive back to Queenstown where the group was booked to stay at the Crowne PlazaHotel. While the tour group was in Arrowtown, Ms Liu left the group and travelled toQueenstown on the tour bus to check that the Queenstown accommodation wasconfirmed and available.[12] Tourism NZ claims Ms Liu did not tell the members of the tour group whereshe was going or why. Sky Tours claims that Ms Liu was made aware of a problemwith the booking at the Crowne Plaza and travelled ahead to Queenstown with thecoach and driver to resolve this, advising Ms Wang of her plans. The coach returnedto Arrowtown approximately one and a half hours later, without Ms Liu, and pickedup the tour group, returning them to Queenstown where the group checked into theCrowne Plaza Hotel for three nights. Ms Liu was not present when the tour groupchecked in. There were no further scheduled activities for that evening and the tourgroup did not see Ms Liu again that day.[13] Following communications between Sky Tours and Donghu overnight, atmidday on 14 March 2017 Ms He, the sole director and majority shareholder of SkyTours, cancelled the tour group's booking at the Crowne Plaza Hotel. The cancellationarose as part of a commercial dispute between Sky Tours and Donghu. It is the eventsleading up to and following this cancellation of the accommodation that is at the coreof these proceedings.The parties' communications from midnight 14 March 2017[14] Although the commercial relationship between Donghu and Sky Tours wasinitially positive and successful, in early 2017 it soured, because of disputes over latepayments by Donghu and disagreements over tour group and business arrangementsmade by Sky Tours (the commercial dispute).[15] At approximately midnight (Sydney time), Donghu and Ms He from Sky Toursexchanged a series of WeChat messages. The communications were prompted by adispute about the failure of Donghu to pay invoices for Sky Tours services on time,contrary to their contract. The parties then entered into an argument about the conductof the tour group's trip to date. Between 12.23 am and 12.51 am, the followingmessages were sent:4Donghu: based on the current situation, I have to find anotherinbound operator to finish the rest of the itinerary and I'll seekcompensation from you for the actual costs. You had abandoned the tour in Arrowtown for more than 2hours this afternoon, which the visitors had alreadyquestioned us. This is why we have to take action to protectour clients. It's impossible for us to risk our clients in beingabandoned and carry on the rest of the itinerary with you.Sky Tours: Your tours were abandoned in South Africa is publicly known.The really interesting part of the show is yet to come. Aperson like you would want to play games (with me)?Donghu: Ok ok, can the tours be run normally?Sky Tours: ImpossibleWe will take action today to protect our right.[16] The following sequence of timing of the communications among the partiesand Tourism NZ is important to an understanding of the events on 14 March:Midnight 14 March: At or around midnight, Donghu arranged a new tour operator totake over the tour group and booked a day trip for the tour groupto Doubtful Sound. After midnight (Sydney time) the aboveWeChat communications took place between Donghu and SkyTours where Donghu alleges Sky Tours "abandoned the tour inArrowtown for more than 2 hours this afternoon" and that it hasto take action to "protect our clients".3.00 am: Sky Tours tells Ms Liu, the tour guide, to rest in the hotel andarrangements will be made for her to return to Auckland.7.00 am: The tour group departs on the Doubtful Sound day trip with thereplacement tour operator and another coach.7.06 am: Ms Liu receives a WeChat message from Donghu asking fordriver's details.4 Translated by Tourism NZ.7.46 am: Donghu's tour group leader sends WeChat message to Ms Liustating "Have you gone yet? We still need to go to MilfordSound".7.00-7.50 am: Sky Tours' coach arrives at Crowne Plaza for the day trip toMilford Sound. Ms Liu is on standby for instructions from MsHe of Sky Tours.8.11 am: (i) In an email, Donghu advises Tourism NZ that the tourgroup was "abandoned in Arrowtown" for over 2 hours withoutthe coach or tour guide; that there was a problem with the tourgroup's accommodation in Greymouth; and there was afinancial disagreement with Sky Tours. Donghu advises it was"worried Sky Tours would abandon the tour on the way toMilford Sound[and so] booked with [REDACTED] for a daytrip tour to Doubtful Sound. I have to ensure my clients aresafe."5(ii) Ms Liu receives confirmation from an industry contactthat the tour group had boarded a bus to Doubtful Sound at 7.00am, booked through another tour operator the previous night.8.14 am: Ms Liu advises Ms He of Sky Tours that she was informed thetour group has changed to another operator.11.30 am: Ms He calls Tourism NZ and advises that Donghu has changedtour operators to a named operator but is unsure if the name iscorrect. Tourism NZ says that Sky Tours will need to confirmwith Donghu that it intends to change tour operators and anamended itinerary would have to be sent through.12.00 midday: Ms He cancels the tour group's hotel bookings at Crowne Plaza.1.10 pm: In an email, Ms He advises Tourism NZ: "the situation has gonebeyond my control. in the middle of the night, DONGHUinformed me that they would not pay me as required and theyhad change[d] LAND OPERATOR. [The tour group has]gone with another OPERATOR's coach. Actions will betaken within today and tomorrow and I want to inform theOffice that we have been forced to do so."3.43 pm: In response, Tourism NZ asked Ms He: "Could you confirmwith us by writing that the attached group [the tour group] hasbeen cancelled by Shanghai Donghu International TravelServices ? could you confirm that ANZ Sky Tours remainas the responsible ADS approved inbound operator for this5 The redaction concerns the name of the replacement tour operator.group? If not, who is the new responsible ADS approvedinbound operator for this group?"5.16 pm: Ms He to Tourism NZ: The tour group "has changed Operatorwhich was informed by Shanghai Donghu International Traveland this group [has] gone [to] MILFORD without noticing SkyTours. We are not sure which Land Operator they are usingnow. Accordingly, we have cancelled the bookings we made inan attempt to save some money."5.26 pm: Tourism NZ to Ms He: "Could you please clarify that you'vejust cancelled the Milford Sound Cruise activity only andremain responsible for conducting the rest of the itinerary."6.22 pm: Donghu to Tourism NZ: The tour group "has some bigproblems. the tour was abandoned in Arrowtown. In orderto prevent [a] similar situation from happening again, ourcompany came up with a solution that we booked with[REDACTED, another tour operator] for a day trip to DoubtfulSound around midnight this morning! We received an updatethis morning saying that [Ms Liu] had flown to Auckland! Ihave already asked our operator to email [Ms He] and advisethat we will pay off the tour fees in accordance with the contractas long as she fulfils the inbound operator's duties until the toursfinish without any complaints!"8.27 pm: Donghu to Tourism NZ: " all the visitors' luggage hasdisappeared. The visitors were supposed to stay in CrownePlaza for 3 consecutive nights. All the visitors and the tourleader are now standing in hotel lobby."10.55 pm: Donghu emailed Tourism NZ with a complaint about fourissues involving Sky Tours:(i) the accommodation in Greymouth;(ii) Ms Liu disappearing on the bus in Arrowtown;(iii) the change of the Milford day trip; and(iv) the cancelled Crowne Plaza booking."We had asked Lucy early in the morning as to whether she wasstill guiding the group, but she replied in saying that as we hadalready found another inbound operator, she would catch anearly flight going back to Auckland following [her boss']instruction!""when the visitors returned to their rooms they discoveredthat their luggage and belongings [had] all disappeared. We alsoreported this to the police The visitors were very upset andemotional."[17] From the above communications, the following facts can be summarised.Unbeknown to Sky Tours, prior to the above WeChat communication after midnight,Donghu had made arrangements with an alternative ADS operator to take over the tourgroup for a day trip to Doubtful Sound. Donghu did not advise Sky Tours of thisarrangement, which it had organised at midnight on 13 March, approximately 15minutes before the WeChat messaging commenced.[18] At 8.00 am on 14 March 2017 (the next morning) the tour group was scheduledby Sky Tours to depart for a trip to Milford Sound. However, the tour group had leftCrowne Plaza on a different coach at approximately 7.00 am, for a trip to DoubtfulSound with the replacement tour operator. As a result, the tour group did notparticipate in the day trip to Milford Sound, which was paid for and scheduled by SkyTours.[19] At 7.46 am on 14 March, Donghu's tour guide, Ms Wang, asked Ms Liu, "Haveyou gone yet? We still need to go to Milford Sound." At the time of thiscommunication, the tour group had already been seen departing on a different coachwith the replacement tour guide to Doubtful Sound. At 8.14 am, Ms Liu confirmed toMs He of Sky Tours that she had been told by a contact in the industry that the tourgroup had changed to another tour operator, and the tour group had boarded the bus toDoubtful Sound that morning. Ms Liu was told the bookings were made the previousnight.[20] Meanwhile, at 8.11 am, a representative from Donghu had emailed TourismNZ complaining about the actions of Sky Tours, including allegations that Sky Tourshad "abandoned" the tour group in Arrowtown and that Sky Tours should not beeligible to conduct ADS tours. This was the first of several emails on 14 March fromDonghu raising its concerns, which were treated by Tourism NZ as a formal complaintagainst Sky Tours.[21] By 11.30 am, when Ms He of Sky Tours called Ms Guo of Tourism NZ toadvise that Donghu had changed both itinerary and tour operator from Sky Tours to anamed ADS tour operator, whom she understood was the replacement, Tourism NZrequired Sky Tours to confirm with Donghu directly that it intended to change touroperators. If so, an amended itinerary would have to be sent through.[22] At midday, Ms He of Sky Tours cancelled the tour group's accommodationbooking at the Crowne Plaza, where the group was booked to stay until 15 March.The hotel staff removed the tour group's luggage from their hotel rooms.[23] Sky Tours did not confirm with Donghu whether it intended to change touroperators or inform Donghu that the tour group's accommodation had been cancelled.Nor did Donghu advise Sky Tours that the tour group was going to Doubtful Sound,not Milford Sound, or tell Sky Tours of Donghu's intention that the tour group remainat the Crowne Plaza Hotel and potentially continue with the Sky Tours tour. When theguests returned on the evening of 14 March, their belongings had been removed fromthe rooms, and Donghu was required to make alternative arrangements for the tourgroup that evening.Tourism NZ's status[24] Tourism NZ is the operational arm of the New Zealand Tourism Board (theBoard), which was established under the New Zealand Tourism Board Act 1991. TheBoard is a statutory entity under the Crown Entities Act 2004. Under s 7(2) of theNew Zealand Tourism Board Act, its functions are to develop, implement and promotestrategies for tourism, advising both the government and the New Zealand tourismindustry on those strategies. The Board must also give effect to government policywhen directed by the responsible Minister under the Crown Entities Act.6 The objectof the Board is to ensure that New Zealand is marketed as a visitor destination tomaximise long-term benefits to New Zealand.7The ADS system and the Code of Conduct[25] Until the late 1990s the People's Republic of China did not sanction its citizenstravelling outside of Asia for tourism purposes. In 1999, the New Zealand government6 Crown Entities Act 2004, s 7(1)(a).7 New Zealand Tourism Board Act 1991, s 6.signed a Cooperation Arrangement on Tourism Matters (the ADS Arrangement) withthe Chinese government through the National Tourism Association of the People'sRepublic of China. Under the ADS Arrangement, travel to New Zealand was approvedby the Chinese government on the condition that Chinese tourists travelled inorganised tours arranged and led by an approved inbound tour operator, referred to inthe Code as an ADS approved ITO. In this decision I will refer to an ITO as a touroperator.[26] Only an ADS-accredited operator can run an ADS tour. Chinese visitorstravelling on an ADS tour arrive in New Zealand with a single "ADS visa", whichcovers the group as a whole.[27] In 2007, Tourism NZ published the Code of Conduct: China ADS ApprovedInbound Tour Operators and Tour Guides (the Code). The Code was developed byMBIE and Tourism NZ in consultation with members of the New Zealand tourismindustry and relevant New Zealand government agencies to implement the ADSArrangement and to deal effectively with the quality issues affecting the China-inbound tour market.[28] Section 1.3 requires the provisions of the Code to be interpreted so as to giveeffect to the purpose set out in s 1.1, which is as follows:(a) to improve New Zealand's competitive position in the China outboundtour market and encourage sustainable growth of China inbound toursto New Zealand; and(b) to prescribe a set of procedures and standards which, if complied withby the ITOs and tour guides, will ensure that Chinese visitors receive agood quality tour experience in New Zealand.[29] An ADS-approved tour operator must comply with the Code and meet theobligations and standards described at section 4 of the Code:8(a) the primary obligation is to provide a good quality tour experience forChinese visitors;8 Section 4 is set out in full in Appendix I to this judgment.(b) every ADS-approved operator must, at all times, conduct andadminister ADS tours to a high professional standard of service andaccountability and must manage the ADS tour groups in a proper andprofessional manner;(c) every ADS-approved operator owes a duty of care to the Chinesevisitors to ensure they are treated at all times as one would treat awelcome guest in one's own home and the stay in New Zealand is madeas enjoyable as possible;(d) every ADS-approved operator owes a specific duty of care to ensurethe Chinese visitors are kept safe and secure while in New Zealand, notexposed to physical or psychological harm, given full, comprehensiveand accurate information in answer to their questions and anycomplaints about the tour are dealt with promptly and effectively.[30] The ADS system and Code are managed and monitored by Tourism NZ's ChinaMarket Development Unit. For the purposes of this proceeding, Tourism NZ's role islimited to:(a) assessing operators for ADS approval in accordance with ss 2.2 and 2.3of the Code;(b) granting ADS approval to operators in accordance with s 2.6 of theCode; and(c) managing any potential breach of the Code by an operator inaccordance with s 8.1 of the Code.[31] Any ADS approval is issued for a term of 12 months from the date ofnotification and can be renewed on application.9[32] Where Tourism NZ becomes aware of a breach or potential breach of the Code,section 8.1 specifies the process it should follow:108.1 TNZ will deal with a potential breach of the Code by an ADSapproved ITO as follows:a. TNZ will draw the potential breach to the attention of the ADSapproved ITO and ask for an explanation as to whether, and ifso, why it occurred.9 Sections 2.10 and 2.11 of the Code.10 Sections 8.1–8.7 and 8.10 are set out in full in Appendix II.b. The ADS approved ITO will have 5 working days to provideTNZ with an explanation in writing as to whether and why thepotential breach occurred.c. If TNZ is satisfied with the ADS approved ITO's explanation,no further action will be taken.d. If the ADS approved ITO does not provide an explanation inwriting or TNZ is not satisfied with the ADS approved ITO'sexplanation, TNZ will notify the ADS approved ITO of thebreach and the action it proposes to take.e. The ADS approved ITO will have 10 working days fromTNZ's notification to respond to TNZ in writing and showcause;i. why the asserted breach should not be considered abreach of the Code; and/orii. why the proposed action should not be taken.f. TNZ, having considered any response by the ADS approvedITO under section 8.1(e), may decide:i. to take no further action;ii. to require corrective action by the ADS approved ITOto remedy the breach and to prevent the same breachfrom happening again;iii. to continue the ADS approved ITO's ADS approvalon probation for a stated period of time and on statedconditions, in which event section 8.6 will apply; oriv. to proceed with a recommendation for suspension orrevocation, in which event section 8.7 will apply;and will notify the ADS approved ITO of its decision.[33] Where Tourism NZ decides that the appropriate penalty is suspension orrevocation of the operator's ADS approval status, Tourism NZ cannot suspend orrevoke the status unilaterally. It must make a recommendation under section 8.7 ofthe Code to the Chief Executive of MBIE, who may revoke or suspend the operator'sapproval status, or place the operator on conditional probation, or seek furtherinformation from Tourism NZ or the operator, or take some other action. MBIE is alsoresponsible for monitoring Tourism NZ.Tourism NZ's response to Donghu's complaints[34] Following receipt of Donghu's emails, Tourism NZ treated them as a formalcomplaint against Donghu. At 11.48 am on 15 March, Tourism NZ emailed Sky Toursan "informal notice" of the potential breaches of sections 4.2, 4.3, 4.4 and 4.26 of theCode in respect of three issues:(a) the accommodation problem in Greymouth;(b) Ms Liu's disappearance in Arrowtown and planned departure toAuckland, leaving the tour group with no approved tour guide; and(c) the cancellation of the tour group's Crowne Plaza booking.[35] There followed significant correspondence between Tourism NZ and SkyTours, leading to a preliminary assessment of 5 May 2017 which advised Sky Toursof its proposed recommendation of revocation, subject to Sky Tours' opportunity toshow cause why there were no breaches of the Code or the proposed action should notbe taken. Subsequently, Tourism NZ made three decisions all recommendingrevocation of Sky Tours' ADS status.Tourism NZ's decisions[36] Tourism NZ made three relevant decisions which are the subject of this judicialreview.[37] The first decision was made on 19 June 2017 (the June Decision). In the JuneDecision, Tourism NZ first decided to recommend to MBIE that Sky Tours' ADSapproval status be revoked. The reasons given by Tourism NZ were:(a) Sky Tours had misunderstood its obligations under the Code;(b) Sky Tours had failed to take all reasonable steps to ensure that itcomplied with the Code;(c) Sky Tours had failed to take steps to verify that its services, and thoseof the tour guide, were no longer required by the tour group; and(d) Sky Tours failed to ensure the tour group were kept safe and secure,were not exposed to harm and were provided with comprehensiveinformation.[38] The second decision was made on 14 September 2017 (the SeptemberDecision) where Tourism NZ maintained its decision to recommend to MBIE that SkyTours' ADS approval status be revoked. The September Decision set out the followingreasons for recommending revocation:(a) Sky Tours had demonstrated a significant lack of care;(b) Sky Tours' communication, and lack thereof, with Donghu wasunsatisfactory;(c) Sky Tours failed to take steps to verify that it was no longer the operatorresponsible for the tour group;(d) it was inappropriate for Sky Tours to blame Donghu or Tourism NZ forits conduct;(e) Sky Tours had misunderstood its role as an ADS approved operator;(f) Sky Tours had not taken responsibility for its poor communication andhandling of the situation; and(g) Tourism NZ noted Sky Tours' argument that this incident was a "one-off" but considered that the conduct was of such a serious nature that itwarranted recommending revocation.[39] The final decision was on 13 October 2017 where Tourism NZ recommendedto MBIE that Sky Tours' ADS approval status be revoked under s 8.7 of the Code (theRecommendation), because Tourism NZ determined that Sky Tours has breachedss 4.2, 4.3 and 4.4 of the Code for the following reasons:(a) it has not treated the Chinese visitors as one would treat a welcomeguest in one's home (contrary to s 4.3);(b) it has not ensured that the Chinese visitors' stay in New Zealand wasmade as enjoyable as possible (contrary to s 4.3);(c) it has not kept the visitors safe and secure or provided them with fullinformation (contrary to s 4.4); and(d) it has not conducted and administered the tour group's tour to a highprofessional standard of service and accountability (contrary to s 4.2).[40] Tourism NZ concluded that revocation was justified because the conduct ofSky Tours was particularly serious: it had the potential to undermine the tour group'sexperience, and it breached the Code's primary purpose to provide a good-quality tourexperience for Chinese visitors on ADS tours.Issue 1 – Are Tourism NZ's decisions reviewable?[41] The Judicial Review Procedure Act 2016 provides for judicial review of theexercise of a statutory power, the failure to exercise a statutory power, and theproposed or purported exercise of a statutory power.11 "Statutory power" is definedin s 5 of the Act as a power to do anything that is specified in s 5(2) and conferred byany Act.12[42] The Code is a "strategy for tourism" and by administering it, Tourism NZ isexercising a power conferred by the New Zealand Tourism Board Act 1991 in relationto the functions of the Tourism NZ Board.13 The parties are in agreement that suchactions are an exercise of statutory power and are amenable to review.[43] While Tourism NZ accepts its decision to recommend revocation of ADSapproval is "public in nature" and amenable to review, it submits that the decision is aprocedural and preliminary step only, required by the Code. Tourism NZ accepts thatpreliminary decisions are reviewable, but only where the decision is a "step in theprocess where the step is capable of altering rights, interests or liabilities."14 It submitsthat the preliminary decision in this case does none of those things and therefore theapplication is premature: the Recommendation decision has not had and cannot haveany effect on Sky Tours' status. Tourism NZ submits the process remaining beforeMBIE still provides an opportunity for Sky Tours to provide further information beforeany decision is made that affects its business.11 Judicial Review Procedure Act 2016, s 3.12 Judicial Review Procedure Act 2016, s 5(1)(a).13 New Zealand Tourism Board Act 1991, s 7.14 Marlborough Aquaculture Limited v Chief Executive, Ministry of Fisheries [2003] NZAR 362(HC) at [14].[44] Tourism NZ does accept, however, that this application for review has beenfiled at a stage of the proceedings which is beyond the initial stage and that theRecommendation report is likely to be influential in the ultimate decision.[45] Sky Tours submits that Tourism NZ's finding as to breach of the Code appearsto be in the nature of a final decision and falls within the categories of interim decisionsthat are judicially reviewable, as it will have a substantive impact on Sky Tours' rights.[46] The critical issue for determination is whether Sky Tours' application forjudicial review is premature, and therefore not reviewable.Legal principles[47] The English and New Zealand authorities caution that the availability ofjudicial review before a final decision has been made is wholly exceptional andprematurity may provide a discretionary ground for declining review.15 It can occur,however, where the relevant procedure can be viewed as part of the decision itself,16or where the procedure of decision-making has seriously gone wrong or off the railsat an early stage.17[48] Both parties placed reliance on the Court of Appeal's decision in Singh v ChiefExecutive of the Ministry of Business, Innovation and Employment.18 In Singh, theCourt held that preliminary decisions are amenable to judicial review.19 Indetermining whether a preliminary decision could be reviewed, the Court found thefollowing factors are relevant:20(a) The nature of the statutory power being exercised.(b) The stage that has been reached in the relevant statutory process.15 Board of Airline Representatives New Zealand Inc v Attorney-General HC Wellington CP391/98,8 December 1998; R v Panel on Takeovers and Mergers, ex parte Guinness Plc [1990] 1 QB 146(CA) at 178 – 179; Zaoui v Attorney-General (No 2) [2005] 1 NZLR 690 (CA) at [183]; Zhao vNew Zealand Law Society [2012] NZHC 2169, [2012] NZAR 894 at [67].16 Board of Airline Representatives, above n 15; Singh v Chief Executive of the Ministry of Business,Innovation and Employment [2014] NZCA 220, [2014] 3 NZLR 23 at [35]; MarlboroughAquaculture Ltd, above n 14.17 Guinness, above n 15; Marlborough Aquaculture Ltd, above n 14, at [15].18 Singh, above 16.19 Singh, above 16, at [40].20 At [38].(c) The extent to which the statutory power exercised is likely to beinfluential in the ultimate decision.(d) Whether there are any further opportunities in the statutory process tocorrect any apparent error including the availability of a right toappeal or seek judicial review of a decision ultimately reached at theconclusion of the statutory process.[49] The Court further observed that:21 cases of this type are likely to be exceptional but where it is demonstratedthat an error of law or process has occurred which is likely to have a materialinfluence on the final decision, the Court may be prepared to intervene. Thecases we have discussed are illustrative of situations falling into this category.[50] The Court of Appeal in Singh cited with approval Marlborough AquacultureLimited v Chief Executive, Ministry of Fisheries, where Ronald Young J opined thatreview was available where procedures at an early stage in a decision-making processhave seriously gone off the rails.22 He said:23 there may be situations where because the procedure of decision-makinghas seriously gone off the rails at an early stage in the process it is essentialthat the Court quashed the decision. This will particularly be the case whereno form of further consultation with the aggrieved party can cure the defect.An obvious example is overt bias by a decision-maker. If established at apreliminary stage it will probably be fatal to all subsequent decision-making.[51] Ronald Young J further observed that where the courts have reviewedpreliminary decisions, those decisions have often been a "step in a process where thestep is capable of altering rights, interest or liabilities."24 It is this category ofreviewable preliminary decisions upon which Sky Tours relies, as Tourism NZ'srecommendation will have substantive impact on Sky Tours' rights. Ronald Young Jaccepted that views will differ on what is a "draft" or a "proposed" or a "preliminary"decision, because so much depends upon a clear analysis of the facts.25 He concludedthat the "essence seems to be that if the interim decision is to be the final decisionthen it will be reviewable."2621 At [40].22 Singh, above 16, at [36], citing Marlborough Aquaculture Ltd, above n 14, at [15].23 Marlborough Aquaculture Ltd, above n 14, at [15].24 Marlborough Aquaculture Ltd, above n 14, at [14].25 At [16].26 At [16].[52] Examples of cases where preliminary steps have been reviewable as capableof altering rights include Hot Holdings Pty Ltd v Creasy & Ors,27 and Zhao v NewZealand Law Society.28 In Hot Holdings, the High Court of Australia held that apreliminary assessment and recommendation by a mining warden had a discernibleeffect upon the Minister's subsequent exercise of a discretion to grant a mininglicence.29 It was therefore reviewable. In Zhao, Kós J referred to both MarlboroughAquaculture Ltd and Hot Holdings in finding that an application for review was notpremature when the recommendation from the Standards Committee would be givenconsiderable weight by, and would be influential in, any determination by theCommittee.30Discussion[53] Under the Code of Conduct, Tourism NZ has the power to investigate breachesof the Code and can exercise its discretion to impose any of the penalties contained insection 8.1(f). These are set out in full in Appendix II. In summary, the range ofavailable penalties are: to take no further action; to require corrective action; tocontinue on probation on conditions; or to recommend to MBIE the suspension orrevocation of an operator's status. Once Tourism NZ has exercised its discretion tomake a recommendation, it is described under the Code as a "decision".31[54] Under this framework, Tourism NZ is responsible for undertaking thecomplaints procedure against ADS tour operators and ADS tour guides. Theprocedure under the Code requires Tourism NZ to receive complaints about breachesof the Code by an ADS-approved tour operator, drawing the breach to the attention ofthe operator and asking for an explanation in writing. Tourism NZ must then considerany response from the operator and from there make a decision on the ultimate remedyor penalty.32 The investigation and/or inquiry into the complaint is conducted solelyby Tourism NZ, and in making its recommendation to the Chief Executive of MBIE,Tourism NZ is wholly responsible for the complaint process.27 Hot Holdings Pty Ltd v Creasy & Ors (1996) 134 ALR 469 (HCA).28 Zhao, above n 15.29 At 174.30 At [66].31 Section 5.16(b)(ii) of the Code.32 Section 8.1(f) of the Code.[55] Where Tourism NZ recommends revocation of a tour operator's ADS approval,section 8.7(b) of the Code prescribes the Chief Executive's power as follows:(b) on considering the report and recommendation from TNZ and anyresponse by the ADS approved [tour operator] and having regard toany other relevant matters, the [Chief Executive], MBIE may:revoke the ADS approval; or[impose any of the other lesser penalties]; ortake some other action;[56] Tourism NZ submits that Sky Tours still has an opportunity to provideinformation to the Chief Executive of MBIE to influence the ultimate decision and theChief Executive has discretion to impose a range of other (and less serious) penalties,including taking no action at all. It submits that the Chief Executive is not under anyobligation to accept Tourism NZ's Recommendation. As an illustration of the extentof the discretion in the Chief Executive, Tourism NZ points to the difference in thewording of the Code relating to revocation of a tour guide's ADS standing. In thatcase, the Chief Executive should accept the recommendation unless it is unreasonableor proper process has not been followed.33[57] As Ronald Young J said in Marlborough Aquaculture Ltd, one of the factorsmitigating against finding that an interim decision is not final, and therefore notreviewable, is where it "is subject to change if those affected can convince thedecision-maker that it is in error".34[58] In comparing the Recommendation report here with the factors applicable to"interim" or "proposed" decisions, the following considerations appear relevant:(a) Tourism NZ has the responsibility and powers under the Code toundertake the complaint procedure for breaches of the Code, providingthe basis for the exercise of the final decision vested in the ChiefExecutive of MBIE;33 Section 5.16(b) of the Code.34 Marlborough Aquaculture Ltd, above n 14, at [16].(b) the Recommendation report, as acknowledged by Tourism NZ, is likelyto be influential in the ultimate decision; and(c) although the Chief Executive may "seek further information" fromTourism NZ or the tour operator, there are no inquiry powers vested inthe Chief Executive of MBIE and there is no provision under the Codefor a hearing or similar means for "those affected" to convince the ChiefExecutive of any errors.[59] I consider the Recommendation report by Tourism NZ does not fall into thecategory of "an interim" or "a proposed decision". For the above reasons, I amsatisfied that the "essence" of the Recommendation report is in the nature of a finaldecision in these circumstances,35 and is reviewable at this stage of the decision-making procedure.Conclusion[60] The Recommendation decision of Tourism NZ is reviewable and theapplication for review is not premature.Issue 2 – Are there grounds to judicially review the decision?[61] I turn now to consider whether there are grounds to judicially review TourismNZ's Recommendation, such as to warrant the intervention of the Court.[62] As is common in judicial review proceedings, there is considerable overlap onthe grounds pleaded by Sky Tours. The same factual matters are pleaded, with slightlydifferent nuancing in respect of the various claims of review. The claims in the firstcategory include mistakes of fact, the failure to consider relevant considerations, andbreaches of natural justice and procedural impropriety. The latter, separately claimed,include inadequate investigation, failure to disclose information and failure to give35 The Recommendation report will be referred to as the Recommendation decision, as it is the lastdecision and is the subject of review. The previous decisions are steps in Tourism NZ's decision-making process, resulting in its Recommendation decision.reasons for the penalty recommendation. The claims in the second category ofunreasonableness, disproportionality, and substantive unfairness also merge.[63] From a review of the facts and the submissions from both parties, I considerthis application falls to be considered under three heads of claim:(a) Mistake of fact;(b) Breaches of natural justice; and(c) Unreasonableness/proportionality.I will deal with each of them in turn.Mistake of fact[64] Sky Tours submits that Tourism NZ made mistakes of fact in determining thatit breached the Code and in recommending revocation as the appropriate sanction.Although Sky Tours pleaded six errors of fact, a number of the claims overlap and aremore appropriately dealt with as natural justice claims. In my view, there is onerelevant claim to be assessed under this ground:(i) Tourism NZ, based on the 7.46 am WeChat message from Donghu'steam leader to Ms Liu, believed that the tour group departed the CrownePlaza in Queenstown after the message was sent. Ms Liu had advisedTourism NZ that the tour group had left Crowne Plaza with a differenttour operator at approximately 7.00 am on the morning of 14 March2017, before the Sky Tours-organised bus arrived to take the group toMilford at 7.50am.[65] Tourism NZ in response says it provided Sky Tours with several opportunitiesto provide information and address any alleged mistakes of fact in its responses to theJune and September Decisions. It says Sky Tours did make comment on its allegedmistakes of fact in these responses and Tourism NZ took these into account.Legal principles[66] It is still uncertain whether or in what circumstances mistake of fact is anindependent ground of judicial review. As Philip Joseph warns in Constitutional andAdministrative Law in New Zealand, the courts have moved cautiously towardsdeveloping a mistake of fact doctrine at common law,36 and in Bryson v Three FootSix Ltd the Supreme Court found that mistake of fact is a manifestation of "error oflaw" review.37 In doing so, the Supreme Court imposed a stricter review threshold formistake of fact than had been the practice, observing:38An ultimate conclusion of a fact-finding body can sometimes be insupportable– so clearly untenable – as to amount to an error of law: proper application ofthe law requires a different answer. That will be the position only in the rarecase in which there has been, in the well-known words of Lord Radcliffe inEdwards v Bairstow, a state of affairs "in which there is no evidence to supportthe determination" or "one in which the evidence is inconsistent with andcontradictory of the determination" or "one in which the true and onlyreasonable conclusion contradicts the determination".As the Court noted, the applicant "faces a very high hurdle".39[67] A decision will only be reviewed on the ground that the decision-maker madea mistake as to an established fact, if that fact played a material part in the decision-maker's reasoning.40 As the authorities caution, it is not the court's function to reviewfactual inferences about which differing views may be reasonably held; it is not amistake to adopt one of two differing, but reasonable, points of view of the facts.41Consequently, as Joseph observes, the courts retain only a residual jurisdiction overdemonstrable errors of fact. Only where "on the totality of the evidence, somethinghas gone wrong or an injustice has been done" will the decision be open torectification.4236 Philip A Joseph Constitutional and Administrative Law in New Zealand (4th ed, Brookers Ltd,Wellington, 2014) at 990.37 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [26].38 At [26] (footnotes omitted).39 Bryson, above n 37, at [27].40 E v Secretary of State for the Home Department [2004] EWCA Civ 49, [2004] 1 QB 1044 at [66];and Lewis v Wilson and Horton Ltd [2000] 3 NZLR 546 (CA) at [92].41 New Zealand Fishing Industry Association Inc v Minister of Agriculture & Fisheries [1998] 1NZLR 544 at 552.42 Joseph, above n 36, at 993.Discussion[68] As explained above,43 Donghu, prior to his 12.23 am WeChat exchange withMs He, made arrangements at midnight for the tour group to be taken over by analternative tour provider. This tour provider was also an ADS tour operator, who wasasked to take the tour group to Doubtful Sound on the morning of 14 March, notMilford Sound as Sky Tours had organised.[69] Tourism NZ was advised by emails, as early as 8.11 am on 14 March, thatDonghu had changed the group's itinerary and booked the tour group for an alternativeday trip to Doubtful Sound with another ADS tour operator. This was an alteration ofthe tour group's itinerary and the contractual arrangement with Sky Tours.[70] Tourism NZ's interim decisions and the final Recommendation decision eachassert, in its view, that Sky Tours was not entitled to rely on the fact that the tour groupdid not use the planned Milford Sound activity on 14 March 2017 as confirmation thatSky Tours was no longer responsible for those visitors. In the final Recommendationdecision, this phrase is added:Particularly in light of the communication from Dong Hu to the tour guide thatmorning.[71] The above phrase is a reference to the 7.46 am WeChat message from Ms Wangto Ms Liu saying, "Are you still here? We need to go to Milford Sound." At the timeof this message, the evidence shows that the tour group had already left at 7.00 amthat day with the replacement tour operator for Doubtful Sound. It appears thatTourism NZ did not investigate the timing of that message, or confirm with Ms Wang,when and why that message was sent before deciding that Sky Tours was not entitledto consider it was no longer responsible, at least for that day, for the tour group.Tourism NZ goes further and says that:Sky Tours does not appear to have followed up on the group's indication inthe morning that it did want to go to Milford Sound.43 At [17].[72] Because of the significance Tourism NZ placed on this communication, itrequired closer scrutiny and checking. Sky Tours had responded to Tourism NZ on thispoint, stating that Ms Liu and the coach driver had arrived at the Crowne Plaza at 7.50am to collect the tour group and were told they had already left with another coach.[73] That Sky Tours was not available or willing to take the tour group out on 14March is a mistake of fact. Even in this hearing, Tourism NZ submitted that "[o]n themorning of 14 March 2017, the Tour Group was scheduled to travel on an organisedday trip with Sky Tours to Milford Sound. Instead, the Tour Group elected to go toDoubtful Sound, independently of Sky Tours." This submission overlooks the factsthat were known to Tourism NZ by the end of 14 March, that Donghu had deliberatelychanged the tour operator the previous night and had organised for the tour group toleave at 7.00 am or thereabouts for Doubtful Sound. The "election" by the tour groupto go to Doubtful Sound is also inconsistent with Tourism NZ's reliance on the 7.46 ammessage in the Recommendation decision, saying that the group wanted to go toMilford Sound. In the circumstances, I uphold Sky Tours' submission that the 7.46 amWeChat message was disingenuous in these circumstances.[74] Tourism NZ ought to have ensured that it had the facts correct before makingits final Recommendation decision. However, while unfortunate, I do not considerthis mistake of fact was material to the decision that Sky Tours was in breach of itsduties under the Code. Although the mistaken timing of the messages bolsteredTourism NZ's view that Sky Tours was not entitled to rely on the group's change ofthe 14 March activity as confirmation that it was no longer the responsible touroperator, Tourism NZ came to this view without relying solely on the messages (andtheir mistaken timing) in both the June and September decisions. It is only in its finalRecommendation decision that Tourism NZ added the sentence, "particularly in lightof the communication from Dong Hu to the tour guide that morning".[75] Tourism NZ had other reasons for concluding Sky Tours was not entitled torely on the change of plans on 14 March, to confirm it was no longer needed, includingSky Tours' failure to communicate with Donghu on the 14 March (after the midnightWeChat messages) and its failure to ascertain who was in charge of the tour groupfollowing Donghu's change to the group's itinerary. The other factor, which wasinfluential in Tourism NZ's finding that Sky Tours had breached the Code, was SkyTours' unilateral cancellation of the accommodation on 14 March, without furthercommunication or direction.Conclusion[76] Applying the legal principles, a mistake of fact amounting to an error of law isa high threshold. A decision will be reviewed only on the ground that the decision-maker made a mistake as to an established fact if that fact played a material part in thedecision-maker's reasoning. I do not consider that on this mistaken fact alone thedecision is reviewable.[77] However, as Randerson J for the Court of Appeal said in Taylor v ChiefExecutive of the Department of Corrections, "[t]his ground of review may alternativelybe put on the basis that the decision-maker must take reasonable steps to ascertain thefacts and circumstances relevant to the decision."44 I will reconsider this aspect of theclaim under natural justice principles.Breaches of natural justice[78] I now turn to consider the natural justice claims.[79] In essence, Sky Tours submits three principal natural justice breaches. Thefirst is the failure of Tourism NZ to properly investigate a number of matters. Theseinclude:(a) whether the tour guide, Ms Liu, "abandoned" the tour group inArrowtown on 13 March 2017 and subsequently failed to establishwhether the group required her to guide them any further;(b) whether the tour group was waiting to be taken to Milford Sound bySky Tours on the morning of the 14 March 2017, or whether it simply44 Taylor v Chief Executive of the Dept of Corrections [2015] NZCA 477, [2015] NZAR 1648 at[94].went to Doubtful Sound with another tour operator as had beenorganised the night before; and(c) whether Ms Liu informed Donghu that she had been instructed by SkyTours to leave to Auckland on 14 March 2017.[80] The second breach, related to the first, is the failure to consider all of the factsin concluding that Sky Tours had breached its obligations under the Code. Thisincludes Tourism NZ's assumptions that Donghu would continue to use Sky Tours asthe tour operator after the 14 March communications and changes of itinerary and that,even if tour operators had changed, Sky Tours was still able (and required) to complywith the Code and keep all visitor's "safe and secure", Tourism NZ's conclusion thatSky Tours jeopardised the safety of the visitor's, Sky Tours' apparent failure to takesteps to verify Donhgu's intention to change tour operators, and Donghu's role in theevents.45[81] The third is the non-disclosure of Donghu's complaints, which were notdisclosed until an OIA request was made by Sky Tours' solicitors in July 2017, bywhich time Tourism NZ had already released its June decision deciding to recommendrevocation.46[82] The fourth is Tourism NZ's failure to give reasons for revocation.[83] Tourism NZ submits it has complied with the principles of natural justice andits natural justice obligations under section 8 of the Code. Tourism NZ submits thereis no investigative function under the Code. Instead, Tourism NZ must seekinformation directly from the tour operator suspected of breaching the Code, which itdid. It submits it took all reasonable steps to acquaint itself with the relevantinformation and took that information into account when considering the final decisionto recommend revocation. Tourism NZ further submits it provided all relevantinformation to Sky Tours, setting out the relevant obligations under the Code andnotice of what conduct could potentially be in breach.45 These issues were put forward as mistakes of fact in Sky Tours' submissions, however it is moreappropriate to address them under natural justice breaches.46 A request under the Official Information Act 1982.[84] I will deal with the submissions and evidence on natural justice considerationsby focussing on:(i) failure to investigate;(ii) failure to consider all relevant facts;(iii) failure to disclose information; and(iv) failure to give reasons for revocation.Failure to investigate[85] Section 8 of the Code requires Tourism NZ to deal with potential breaches ofthe Code by considering any response by the tour operator under section 8.1(e) beforeit may decide what action it will take. Sky Tours claims that Tourism NZ did notundertake any investigation or inquiry into the tour leader Ms Wang, the tourists of thetour group, or the other ADS-approved tour operator to cross-check factual conflictson the events of 13-14 March following Sky Tours' "explanation" and response.Tourism NZ submits that it does not have an investigative function under the Code.The Code requires only that Tourism NZ "ask for an explanation" from an operator inrespect of any breach of the Code and consider its response.47[86] While there is no strictly investigative direction to Tourism NZ under the Code,it is a principle of natural justice that a decision-maker must investigate sufficiently tobe able to correctly decide the matter at hand.48 Section 8 of the Code requires TourismNZ to deal with potential breaches by considering any response from the tour operatorin making its ultimate decision. Where that response raises facts or issues that are indispute, it can be expected that Tourism NZ will have to investigate, or at least inquireinto, the circumstances surrounding those facts, both to fulfil its duties under section8.1 of the Code and natural justice principles. This does not mean there is a generalduty of pro-active investigation on all decision-makers. But if there is a conflictbetween the evidence supplied by the applicant and the respondent, which may havea bearing on the findings of the decision-maker in relation to the charges or to the47 Sections 8.1(a) and 8.1(e) of the Code (see Appendix I).48 Discount Brands Ltd v Northcote Mainstreet Inc [2004] 3 NZLR 619 (CA) at [47].penalty, the decision-maker may be expected to make further inquiry before reachinga decision.49[87] I have already canvassed Tourism NZ's omission to check the timing of the7.46 am WeChat message from Donghu under mistake of fact.50 Although I found thiswas not a material mistake of fact so as to amount to an error of law on its own, it is afact which ought to have been inquired into and clarified before the Recommendationwas made.[88] Sky Tours submit there are two further complaints which deserveconsideration: Donghu's claim that the tour group was "abandoned" in Arrowtown forup to two hours, which Tourism NZ treated as a "formal complaint", and Ms Liu'sdeparture to Auckland. These claims need to be assessed against the sequence ofevents that occurred on the afternoon of 13 March, when the tour group was inArrowtown, through to the events of 14 March, which culminated in Sky Tourscancelling the tour group's accommodation at the Crowne Plaza.[89] Against a backdrop of the commercial dispute between Donghu and Ms He ofSky Tours over late or non-payment by Donghu, the events in Arrowtown on theafternoon of 13 March assume considerable significance. As the background facts andchronology show, there had been a problem with the tour group's accommodation inGreymouth. Because of a mistake in the accommodation booking, this tour group didnot have a booking for the planned accommodation in Greymouth and was moved toalternative, but high standard, accommodation in Punakaiki.[90] Once the group reached Arrowtown on 13 March, Ms Liu was asked by SkyTours to check on the accommodation at the Crowne Plaza in Queenstown, to avoid arepeat of the Greymouth occurrence. Ms Liu left the tour leader of the group, MsWang, in Arrowtown with the tour group, taking the coach and the coach driver toQueenstown to confirm the group's accommodation arrangements. Approximatelytwo hours later the coach returned to Arrowtown to pick up the group. Ms Liu stayed49 Fraser v State Services Commission [1984] 1 NZLR 116 (CA) at 125.50 At [73].in Queenstown and the tour group did not see her for the remainder of the evening.This is the basis for Donghu's assertion that the tour group was "abandoned".[91] Nothing had been planned on the itinerary after the group was to return toQueenstown from their visit to Arrowtown. The initial itinerary schedule had thegroup "sightseeing" in Arrowtown for half an hour and "heading to Queenstown" from4.30 to 6pm. Ms Liu, in her response to Tourism NZ and in her affidavit evidence,explained that the group had "two hours of free time in Arrowtown" and she used thisfree time to go to Queenstown to "sort out the hotel issue." No untoward incidentoccurred, and the coach took the tour group back to Queenstown as planned.[92] On any view of the matter, the tour group was with its own tour leader in thelatter stages of the Arrowtown to Queenstown leg of the itinerary. The group returnedto Queenstown on the designated coach, and there were no scheduled events for thatevening. Donghu labelled the incident as the tour group being "abandoned." This hasbeen accepted by Tourism NZ without further investigation or an assessment of thesignificance or otherwise of the incident. Mr Yeo, the manager of the China MarketDevelopment at Tourism NZ, in his affidavit for this hearing, described the Chinesevisitors as "being stranded without a tour guide", which appears to be a reference tothe Arrowtown incident, as the following day the tour group was with the replacementtour guide. This view forms the basis of Tourism NZ's preliminary assessments, alsorecorded in the Recommendation decision, that the visitors were "left" without anADS tour guide on 13 March 2017 in its June and September Decisions. Although itdid not form a part of Tourism NZ's "final assessment" in its Recommendationdecision, it forms a part of the background on which Tourism NZ based its decision.[93] At the very least, clarification needed to be sought about precisely what andwho had been abandoned. It is correct, from the facts available, that Ms Liu did notreturn to Arrowtown on the coach to uplift the tour group and oversee the checking inat the Crowne Plaza on 13 March. However, there is no reference in the Code that atour guide must be with the group at all times. Even if that were the case, that is amatter that concerns Ms Liu and her conduct as a tour guide under the Code. The tourguide's conduct and the tour operator's conduct are dealt with and consideredseparately under the Code.[94] The second claim of Donghu was that Ms Liu told Donghu she had beendirected by Sky Tours to depart for Auckland on 14 March. This formed the basis ofTourism NZ's assessment that Sky Tours "was still unable to provide any evidence"that Sky Tours took steps to ensure the visitors were kept safe, secure and not exposedto any harm "before instructing the ADS tour guide to leave the group."[95] On the evidence before me, there is no record of a communication betweenDonghu and Ms Liu on 14 March about Ms Liu's instruction to fly back to Auckland.It is agreed, however, that Ms Liu did not fly back until 15 March. In her affidavit,Ms Liu deposes that she did not recall receiving any further correspondence fromDonghu that morning after the 7.46am WeChat message. She also deposes that shekept in communication with Ms Wang, the tour leader, to assist her in making bookingsand ensuring the group had the best possible tour in the circumstances.[96] Again, Tourism NZ needed to check on the alleged communication fromDonghu to Ms Liu before incorporating it in the background of the Recommendationdecision as a reliable fact. This purported communication has led Tourism NZ topresent a more adverse picture of Sky Tours conduct than is fair.[97] I consider it is implicit in a complaint procedure that the entity undertaking thecomplaint process, seeking information and deciding on the penalty, has an inquiry oran investigative function to deal with allegations of breach and evaluate or assess anyresponses. Natural justice requires that a decision-maker has a duty to know and findessential facts,51 particularly when they are in dispute.52[98] I am unable to accept Tourism NZ's submission that there is no investigativefunction required of them. It is incumbent on Tourism NZ, in undertaking a complaintsprocedure, to investigate by seeking information, checking the information received,and considering the facts objectively, before making a decision, particularly when theeffects of that decision would adversely affect Sky Tours' commercial reputation andstanding. I consider Tourism NZ failed to fulfil its investigative functions inundertaking its complaints procedure.51 Minister of Conservation v Maori Land Court [2008] NZCA 564, [2009] 3 NZLR 465 at [114].52 Fraser, above n 49, at 125.Failure to consider all facts[99] As Tourism NZ identified in its Recommendation decision, the purposes ofsections 4.2, 4.3 and 4.4 of the Code are to ensure that ADS tours are conducted andadministered by an ADS-approved tour operator to a high professional standard ofservice and accountability and managed in a proper and professional manner. Sections4.3 and 4.4 prescribe a duty of care for an ADS-approved tour operator to ensure thatthe Chinese visitors are treated as one would treat a guest in one's own home, that theirstay is as enjoyable as possible, that they are kept safe and secure, not exposed to anyharm, and are provided with comprehensive information.[100] Tourism NZ acknowledged the explanation provided by Sky Tours but was notsatisfied with its handling of the matter because Sky Tours had not treated the Chinesevisitors as one would treat a welcome guest in one's home, ensured that the visitors'stay in New Zealand was made as enjoyable as possible, kept the visitors safe andsecure, nor given them full information, as provided under sections 4.3 and 4.4 in theCode. Nor did Sky Tours, in Tourism NZ's view, conduct and administer the ADStour to a high professional standard of service and accountability as required undersection 4.2.[101] In itemising Sky Tours' breaches of the Code, Tourism NZ focused on fourmatters:(a) Sky Tours' conduct was "marked for its unsatisfactorycommunication". This is a reference to the WeChat exchange betweenDonghu and Ms He of Sky Tours at 12.16 am, and Ms He's failure toreassure Donghu that its tourists were not at risk, or to confirm thatDonghu was going to make alternative arrangements for the tour group.No further communication was made by Sky Tours with Donghu as towhether Donghu intended to change tour operators for the tour group.(b) Sky Tours was not entitled to rely on the fact that because the tour groupdid not undertake the planned activity to Milford Sound with Sky Tourson 14 March, Sky Tours was no longer the tour operator. Tourism NZrelied on the fact of "the communication from Dong Hu to the tourguide that morning", which is a reference to the 7.46 am message sentfrom Ms Wang to Ms Liu.(c) Sky Tours chose not to seek to clarify or confirm with Donghu whetherDonghu intended to change tour operators to establish that the tourgroup had in fact "abandoned" the tour guide on 14 March 2017 and nolonger required her as the group's tour guide.(d) Sky Tours cancelled the hotel bookings at midday without attemptingto contact Donghu, despite the clear instruction from Tourism NZ thatit would need to confirm that Sky Tours was no longer the responsibletour operator for the remainder of the itinerary.[102] In response to Tourism NZ's emailed notice of breaches, Sky Tours apologisedfor the extreme action of removing the group from its accommodation in Queenstownbut said that the situation was unbearable because three tours were "abandoned" byDonghu without explanation. This led to unused bookings and cost. Sky Tours alsoquestioned Donghu's role in the incident, saying that Donghu took advantage of thesituation and of Sky Tours.[103] Tourism NZ responds to the criticism from Sky Tours that it should haveconsidered Donghu's role in the events by stating that it has no jurisdiction over theChinese seller Donghu and that it was Sky Tours' responsibility to contact bothDonghu and the other ADS tour operator to confirm who was responsible for the tourgroup. Having determined that it was not satisfied with the explanations from SkyTours about its handling of the matter, Tourism NZ expressed its concern that SkyTours did not take any responsibility for its poor communication and handling of thesituation and determined that Sky Tours had breached the Code as set out above. Itdetermined further that it was appropriate to proceed with the recommendation thatSky Tours' ADS approval status be revoked under section 8.1(f)(iv) of the Code.[104] By the end of 14 March 2017, Tourism NZ was aware of the following facts:Donghu had changed tour operator and Tourism NZ knew the name of that operator;Donghu's decision to cancel the tour with Sky Tours to Milford Sound; before theWeChat communications with Sky Tours after midnight on 14 March, Donghu hadalready engaged an alternative tour operator for a Doubtful Sound tour; there was nocommunication from Donghu to Sky Tours about this; and Sky Tours had taken theaction of cancelling the accommodation for the tour group.[105] However, in its Recommendation decision, Tourism NZ did not give adequateconsideration to a number of the above facts, or others, including:(a) Donghu engaged another tour operator;(b) Donghu changed the tour group's itinerary by booking a day tour toDoubtful Sound for 14 March and effectively placed the tour group inanother ADS-approved tour operator's hands. In this instance, this wasdone prior to the WeChat communications with Ms He of Sky Toursjust after midnight on 14 March 2017;(c) The replacement ADS operator was named and known to Tourism NZ,but Tourism NZ took no steps to clarify with this operator how itproposed to comply with its duties under the Code when it uplifted thetour group at 7.00 am on 14 March. The duty of care under section 4.3of the Code requires "[e]very ADS approved ITO" to ensure that "theChinese visitors are treated at all times as one would treat a welcomeguest in one's own home", and their "stay is made as enjoyable aspossible for them". The replacement ADS operator did not seekinformation from Sky Tours to confirm it was now taking the tour groupfor the day and was responsible for the group, despite the change initinerary; and(d) Importantly, the tour group departed the Crowne Plaza atapproximately 7.00 am for Doubtful Sound, before Ms Liu and thecoach arrived to take the tour group to Milford and before the 7.46 amWeChat message.[106] To maintain a consistent approach under the Code, I consider Tourism NZ asthe decision maker should have regard to all of the circumstances and the responsesfrom Sky Tours. This would include whether the replacement operator and/or Donghuhad contributed to any breach which jeopardised the tour group's safety, security andenjoyment. Notably, the ADS replacement tour operator had the same obligations andduties under the Code as Sky Tours.[107] As a result of not considering the other participants in these circumstances,Tourism NZ has effectively focused solely on Sky Tours and its lack ofcommunication, holding it responsible for the breaches of the Code solely.[108] That said, it is correct that Sky Tours did not attempt to communicate furtherwith Donghu, despite being advised to do so by Tourism NZ, to clarify whetherDonghu intended that it remain the tour operator for the group after 14 March. Further,the decision by Ms He to cancel the Crowne Plaza accommodation for the tour groupwithout confirming its position with Donghu was plainly not appropriate and gave riseto an appropriate concern on the part of Tourism NZ.[109] However, Tourism NZ has failed to look at the whole picture with all of theparticipants in these series of events that occurred on 13 and 14 March. Tourism NZhas excluded the actions of Donghu on the basis that Tourism NZ has no jurisdictionover the seller and ignored the fact that another ADS-approved operator took over,without notification to Tourism NZ or to Sky Tours. Those facts mean that:(a) the itinerary and the operator of this tour group were altered, contraryto the Code and not at the hands of Sky Tours;(b) each tour operator in the changeover was aware of its responsibilities;(c) there was inadequate communication by all three participants.[110] These factors also contributed to the visitors on the tour group not being treatedas required under the Code and form part of the facts and circumstances that shouldhave been relevant to the decision-maker's decision.Failure to disclose information[111] The next matter under the natural justice considerations is Tourism NZ's failureto disclose Donghu's complaints. Tourism NZ did not disclose Donghu's complaintsuntil an OIA request was made by Sky Tours in July 2017, by which time Tourism NZhad already released its June decision recommending revocation.[112] Sky Tours submits Tourism NZ is required by the Code to operate in an openand transparent way when investigating potential breaches of the Code. Section 6.1of the Code obliges Tourism NZ to pass on all complaints about an ADS tour to theADS approved tour operator as soon as possible after receipt of the complaint to enablethe tour operator to resolve the complaint. In failing to disclose Donghu's complaintsuntil an OIA request was made, and after the June decision had already been made,Sky Tours submits Tourism NZ failed in its disclosure obligations to enable Sky Toursto prepare a proper response.[113] Tourism NZ submits the Code does not require Tourism NZ to disclose anydocuments giving rise to a potential breach; it need only inform the tour operator ofthe substance of the breach to the extent that the tour operator can properly respond.[114] Natural justice requires that the party undergoing scrutiny has enoughinformation about the case against him or her to have a fair opportunity of correctingor contradicting it.53 Documents themselves may not need to be disclosed if the fullsubstance of their contents is available.54[115] While Tourism NZ provided the broad overview of the case against Sky Tours,it did not indicate what information it required to make its decision, or that theinformation supplied by Sky Tours was inadequate. It was not until Sky Tours madean OIA request in July 2017 that Sky Tours became aware of the detail, the languageand the context of Donghu's complaints. And, it says, it was when Tourism NZ filedits statement of defence in these proceedings, that it became apparent that other53 Royal Australasian College of Surgeons v Phipps [1999] 3 NZLR 1 (CA) at 14.54 Daganayasi v Minister of Immigration [1980] 2 NZLR 130 (CA) at 145.evidence (such as the correspondence between Sky Tours and Ms Liu) may have beenrelevant to Tourism NZ's considerations.[116] At the time of the Recommendation decision, Sky Tours was therefore unableto properly correct any mistakes of fact or misunderstandings that had arisen. Theseissues have largely already been discussed under both mistake of fact and failure toinvestigate. If full disclosure of the information relied on had been provided to SkyTours before any decisions had been made, Sky Tours would have had the opportunityto correct those mistakes of fact by supplying emails and messages with correspondingtimes and dates to paint a more accurate picture of the events, before Tourism NZ hadmade its Recommendation decision.[117] Although Tourism NZ identified the thrust of Donghu's allegations and thealleged breaches of the sections of the Code when it invited a response from Sky Tours,without the detail and context of Donghu's complaint, Sky Tours was unaware of whatdocumentation would assist. I consider Tourism NZ failed to provide Sky Tours withadequate information to enable Sky Tours to appropriately respond.Failure to give reasons for revocation[118] Tourism NZ did not give any reasons in its final Recommendation (or earlierdecisions) why the harshest penalty was chosen as opposed to the other optionsavailable under section 8.7 of the Code. These other options include suspending ADSapproval on terms and conditions, placing Sky Tours on conditional probation, ortaking some other action.[119] Sky Tours submits it is highly unusual that there is no evidence in the recordof Tourism NZ's decision to demonstrate its deliberation process, what has beenconsidered, and what weight has been given to the information provided by Sky Tours.The lack of reasons given for the ultimate penalty makes it difficult for Sky Tours, andMBIE in making a final decision, to assess the chain of logic to support revocation asan outcome over other available outcomes. This, it says, is a failure of Tourism NZ'snatural justice obligations.[120] Tourism rejects Sky Tours' submission that there is a presumption of a duty togive reasons in this case, because the decision is a discretionary one.[121] The authorities on the need to give reasons, particularly in imposing penalties,have led to findings that the decision-maker or tribunal has fallen into error.55 Morerecently, the Court of Appeal has acknowledged the importance of giving reasons, andaccepted there is a growing trend towards a presumptive duty to give reasons and thatin some cases, fairness may demand them.56[122] In an earlier decision of Lewis v Wilson & Horton Ltd, the Court of Appealconfirmed that there was no invariable rule at common law that public body decision-makers must give reasons for their decisions, but said that it is desirable for thefollowing reasons:57(a) upholding the principles of open justice;(b) providing protection against decision-makers being wrong, arbitrary orinconsistent; and(c) providing a basis on which the lawfulness of decisions can be assessedon appeal or review.[123] I accept that reasons may be abbreviated, and, in some cases, they may beevident without express inference.58 From the Recommendation decision, it is clearthat the reasons for the decision were the breaches of the Code (namely 4.2, 4.3 4.4),though it is less clear what actions led to which breaches, or why the outcome ofrevocation was required. While it may be inferred that Sky Tours' lack ofcommunication with Donghu to confirm it was no longer the tour operator, and itscancellation of the accommodation, led to breaches of the Code, it is not possible todiscern why the outcome was revocation in this instance, instead of a lesser penalty.55 Patel v Complaints Assessment Committee [2007] NZHC 1172; and J v Auckland StandardsCommittee 1 [2018] NZHC 2706, [2018] NZAR 1874 at [29].56 Waikanae Christian Holiday Park Inc v New Zealand Historic Places Trust Maori HeritageCouncil [2015] NZCA 23, [2015] NZAR 302 at [70].57 Lewis v Wilson & Horton Ltd [2000] 3 NZLR 546 (CA) at [75]-[82].58 Waikanae Christian Holiday Park, above n 56, at [73].[124] In the professional conduct cases, which I consider under proportionality,59 thecourts consistently caution that a penalty for misconduct must be a proportionateresponse and the lesser penalty should be adopted, particularly where the misconductwas a one-off offence. Without reasons given for recommending revocation in theRecommendation report here and contrary to the authorities, it is unclear whatconsiderations were taken into account by Tourism NZ and why the lesser penaltieswere not considered, or if so, why they were inappropriate.Conclusion[125] The decision-maker has a duty to act fairly and all persons materially affectedby a decision must be accorded procedural fairness.60 As the Court of Appeal hasnoted on numerous occasions, the requirements of natural justice are not confinedwithin hard and fast rules but encompass an area of broad principle.61[126] I consider I am in the same position as Wild J in Shaw v Attorney-General (No2), where he found the decisions of the Visiting Justice were unlawful.62 It was thecombination of factors which, grouped together, constituted breaches of naturaljustice. As he described it, the unacceptable combination of a number of proceduralfailures did not demonstrate "fair play in action".63 The consequences of the decisionon an individual often leads to the courts insisting on a stricter compliance withprinciples of natural justice.64[127] In this case, while each of the breaches in isolation might survive challenge ifviewed separately, the result in combination has led to a procedure where, withoutreasons, the harshest penalty has been recommended, namely revocation. Putting allthose factors in combination, the failures to investigate, to consider all relevant facts,59 See [129]–[140] of this judgment.60 Matthew Smith, New Zealand Judicial Review Handbook, (2nd edition, Thomson Reuters,Wellington, 2016) at 785.61 CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 (CA) at 186; Royal Australasian Collegeof Surgeons v Phipps [1999] 3 NZLR 1 (CA) at 16; and Attorney-General v Bay of Islands TimberCompany Ltd [1979] 2 NZLR 511 (CA) at 517.62 Shaw v Attorney-General (No 2) [2003] NZAR 216 (HC).63 At [114]. The decision notes that the phrase was first used by Harman LJ in Ridge v Baldwin[1963] 1QB 539, 578. It has often been repeated since, perhaps most famously by Lord Morris inWiseman v Borneman [1971] AC 297, 309 (HL) and in New Zealand, Furnell v Whangarei HighSchools Board [1973] AC 660, 679, [1973] 2 NZLR 705, 718 PC.64 Murdoch v New Zealand Milk Board [1982] 2 NZLR 108 (HC) at 115.to disclose information and to give reasons for the penalty, I find that Tourism NZ hasacted in breach of the rules of natural justice, in reaching its decision on breach andpenalty.[128] In light of that finding, the other separately-pleaded claims under this headneed no further or separate consideration. I now deal with the last ground, which inlight of the findings of reviewable errors, is relevant to any reconsideration of Codebreaches and penalty.Unreasonableness/Proportionality[129] Sky Tours has claimed unreasonableness, substantial unfairness anddisproportionality. Although Sky Tours submits the decision to revoke its ADS statusapproval was unreasonable, irrational and/or substantively unfair, I consider the realissue is whether the penalty of revocation is disproportionate to the conduct, thesubject of the complaint.[130] Tourism NZ submits that Sky Tours has not provided any evidence that theRecommendation made met the requisite standard for unreasonableness. It acceptsthat it is required to consider all available sanctions and impose the least restrictivesanction which is appropriate in the circumstances. In the Recommendation decision,Tourism NZ explained why it considered that Sky Tours' breaches were particularlyserious and justified recommending revocation. It submits it is implicit from this thatTourism NZ considered that other sanctions were not appropriate given the seriousnessof Sky Tours' breaches.Legal principles[131] An unreasonable decision has been described as a decision that is sounreasonable that no sensible person could have made it.65 Something must beoverwhelmingly wrong with the decision. Under this ground of review, the standardof review will vary according to its context and often involves the related concepts of65 Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223 (CA) at 229.substantive unfairness, proportionality and an "innominate ground", namely wheresomething has gone so wrong it requires the court to intervene.66[132] Although there is much discussion in academic texts and cases as to whethereach of those concepts are stand-alone grounds of review,67 this case involves arevocation of a tour operator's ADS accreditation. It is akin to the penalty cases inwhich the court has used proportionality as a tool to assess whether the penaltyoutcome is proportionate to the alleged misconduct.[133] In Conley v Hamilton City Council, the Court of Appeal noted the uncertaintyof proportionality as a stand-alone ground of judicial review, but continued to discussits advantages:68The practical advantage of the doctrine [of proportionality] is that it is arespectable tool for assessing two categories of cases, namely wheresomething is challenged as being unreasonably oppressive or where there is adistinctly or manifestly improper balancing of relevant considerations.Commonly three tests are employed where the proportionality doctrine isresorted to:• a "balancing test" which requires a balancing of the ends which anofficial decision attempts to achieve against the means employed toachieve them;• a "necessity test" which requires that where a particular objective canbe achieved by more than one of the available means, the leastharmful of these means should be adopted to achieve that objective;and• a "suitability test" which requires authorities to employ means whichare appropriate to the accomplishment of a given law, and which arenot in themselves incapable of implementation or unlawful.Whether proportionality adds much in a case such as the present may be opento argument. For instance, the very reason something may be thought to be"unreasonable" is precisely that it is disproportionate, but it is at least an aidto clearer analysis.66 Guinness, above n 15, at 160.67 For example Joseph, above n 36, at [24.5.2]; and Smith, above n 60, at [61.3].68 Conley v Hamilton City Council [2007] NZCA 543 at [54]-[55] and [58].[134] More recently, the High Court in Mihos v Attorney-General entertainedapplying the proportionality doctrine as a stand-alone ground, however ultimately theCourt erred on the side of caution in an area "where our senior academic writers areof different opinion and the House of Lords has declined to commit itself".69 In otherinstances, disproportionality has been said to be proof of unreasonableness.70[135] While the courts have not adopted proportionality as a distinct head of review,the doctrine of proportionality has been applied as a concept or subset ofunreasonableness or error of law, particularly in cases where penalties have beenimposed. The courts have emphasised that the penalty must have some correlationwith, and not be disproportionate to, the gravity of the offence.[136] In Institute of Chartered Accountants v Bevan, the Court of Appeal found thatproportionality had been established to apply in penalty cases:71We stress that this ruling is made in the particular context of a finding of guiltbeing made and associated penalties being imposed. We are not entering intothe broader question, raised for instance by Lord Diplock as long ago as 1984,whether proportionality is a distinct head of review Rather, we limitourselves to the penalty cases and take comfort from commentary onproportionality which, while recording the controversy about its separateexistence, singles out the penalty area as established[137] The Court observed further that Tribunals and other disciplinary entities areoften acting under legislation and rules, which confer broad powers to make rules andto impose penalties. However, "[t]he powers are not unlimited [t]hey are to beexercised in a measured way, not capriciously." 72[138] In the Supreme Court decision of Morse v Police, in the context of a criminalappeal, Elias CJ said, "[l]ack of proportionality in outcome (more restriction than isnecessary to achieve the legitimate outcome of preservation of public order) is aresult that is substantively unreasonable and amounts to an error of law able to becorrected on appeal restricted to point of law".7369 Mihos v Attorney-General [2008] NZAR 177 (HC) at [87]-[98].70 Isaac v Minister of Consumer Affairs [1990] 2 NZLR 606 (HC) at 636.71 Institute of Chartered Accountants of New Zealand v Bevan [2003] 1 NZLR 154 (CA) at [55].72 At [67].73 Morse v Police [2011] NZSC 45, [2012] 2 NZLR 1 at [40].[139] In the context of cases of professional discipline, the courts have emphasisedthat the penalty imposed ought not be "altogether excessive and out of proportion tothe occasion", or it can be held invalid.74 Dobson J in McGuire v Ministry of Justicereinforced the importance of proportionality of penalty to the seriousness of themisconduct:75Penalty decisions in a variety of professional disciplinary contexts have forsome time been amenable to review on proportionality grounds. The sequenceof decisions made in those contexts lends itself to a proportionalityassessment. The decision-maker would generally make a finding on liabilitybefore determining the most appropriate penalty from a range of optionsavailable. That final component requires a response that is proportionate tothe seriousness of the conduct at issue and is amenable to review on thegrounds that the option selected was not the most proportionate.[140] In the professional disciplinary cases, the courts have reinforced that if thepurpose of imposing a disciplinary sanction can be achieved short of striking-off, thelesser alternative should be adopted as the proportionate response.76 This appliesparticularly where the misconduct was a "one-off" or a "first offence", in which casethe lesser penalty should be preferred.77Discussion[141] In its Recommendation decision to MBIE, Tourism NZ focused on Sky Tours'conduct with this tour group exclusively. It disregarded Sky Tours' previous 18 yearsin the industry and whether this conduct was repeat behaviour, when it stated:Sky Tours' conduct, regardless of whether it reflects a pattern of behaviour, isof a nature serious enough to warrant revocation of its ADS approval. This isconduct that fundamentally undermines the expected role and conduct of anADS approved ITO.[142] It is plain from the evidence of Mr Yeo, the manager of the China MarketDevelopment Unit at Tourism NZ, that he and the two other members of the Unit74 Bevan, above n 71, at [53].75 McGuire v Ministry of Justice [2013] NZHC 894 at [78] (footnotes omitted).76 Daniels v Complaints Committee 2 of the Wellington District Law Society [2011] 3 NZLR 850(Full HC) at [22]; and Roberts v Professional Conduct Committee of the Nursing Council [2012]NZHC 3354 at [50].77 Sorensen v New Zealand Law Society [2013] NZHC 1630 at [43]; and Orlov v New ZealandLawyers and Conveyancers Disciplinary Tribunal [2014] NZHC 1987, [2015] 2 NZLR 606 at[191].regarded Sky Tours' actions as "extremely serious". This view was formed on theinformation available to Mr Yeo and the other members of the Unit, including theallegations about Sky Tours. He described the Unit's reactions as follows:[22] I cannot recall any other complaint in relation to an ITO that involvedChinese visitors being stranded without a tour guide or being checked out ofaccommodation without notice and without consent.[23] In all other cases that I can recall, irrespective of the nature of thebreach (or potential breach), the Chinese visitors were unaware of any issue.In the case of Sky Tours, the Chinese visitors were acutely aware that the ITOhad abandoned them and left them without accommodation.[Emphasis added].[143] This evidence reinforces the view that I have reached about Tourism NZ'sinadequate assessment of Sky Tours' conduct. I have already canvassed theextravagant language used to describe the "abandoned in Arrowtown" incident. Thatincident needed to be placed in context and the conduct of the tour guide needed to beassessed as to whether it was professional or unprofessional in the circumstances.[144] However, the alleged "abandonment" by the tour guide in Arrowtown on 13March has morphed, in Mr Yeo's eyes, into a tour operator that "had abandoned" thetour group on 14 March and "left them without accommodation." The conflation ofthe two events, without more, is troubling. The tour guide had not abandoned the tourgroup on the morning of 14 March. Donghu had unilaterally altered their itinerary andbooked them on an alternative day trip with another tour operator. The basis forasserting that the Chinese visitors "were acutely aware that the ITO had abandonedthem", without the context and the circumstances involved, is misleading.[145] While the findings on Sky Tours' inadequate communication and its unilateralcancellation of the accommodation were open to Tourism NZ, I consider that theconflation of all of the events of 13 and 14 March, combined with the use of hyperboleto describe the Chinese visitors being "stranded without a tour guide" or "abandoned,"has led Tourism NZ to decide that Sky Tours' breaches are so serious, that revocationwas the only penalty to be imposed.[146] Mr Yeo confirms that of the 25 breaches or potential breaches of the Code byother ADS tour operators in the year ending June 2017, this case is more serious thanany other. Those other 25 breaches involve using a non-ADS approved tour guide,using a non- "BCA" star graded coach, and the use of non-QUALMARK endorsedaccommodation for a tour group. It is plain that the facts and circumstances of thiscase are markedly different. However, as the courts have reinforced, the penaltyimposed by a decision-maker should not be excessive or out of proportion to theoccasion. A lesser alternative should be adopted as the proportionate response whereappropriate. As noted above, this would normally apply where the misconduct was a"one-off" or a "first offence".78[147] I consider the recommendation of revocation to be a disproportionate responsehere, because the full facts and context were not taken into account in the findings onbreaches of the Code, nor was there any reference at all in the Recommendationdecision to Sky Tours' 18 years of trading and good reputation in the market withoutany formal complaint. In any penalty context, those matters are usually considered,as the cases demonstrate above. The fact that this was a first-time breach should havebeen taken into account by Tourism NZ, before recommending the most extreme orserious penalty. In summary, I consider the following mitigating factors wereoverlooked by Tourism NZ:(a) Sky Tours' good reputation in the market and tradinghistory/relationships of over 18 years;(b) Sky Tours' track record of zero complaints whilst being an ADS-approved operator and the "one-off" nature of this particular incident;(c) the context of the dispute between it and Donghu and the role of theother ADS tour operator; and(d) the alternative options available to Tourism NZ.78 See [140] of this judgment.[148] Sky Tours submits that given "a number of things went wrong" with TourismNZ's process, the intervention of this Court is warranted. This is the innominateground of review, namely, that something has gone wrong of a nature and degree thatrequires court intervention, as Lord Donaldson framed it in Ex parte Guinness Plc.79I consider this is a case where in combination, as set out under Issue 2 above, there arereviewable errors that warrant the intervention of the Court.[149] For completeness, I have not canvassed the claim of substantial unfairness orunreasonableness separately, in light of my assessment that the revocationrecommendation is disproportionate in the circumstances.Conclusion[150] The recommendation by Tourism NZ that Sky Tours' ADS approved statusshould be revoked was a disproportionate response to the facts and circumstances ofthis case, given the context in which Sky Tours' conduct occurred and the fact that thiswas a "first offence" in 18 years of operation. Tourism NZ failed to give considerationto all the facts and context, in relation to its breaches of Code findings and to the rangeof sanctions available.Issue 3: What remedy, (if any), is appropriate?[151] In light of my findings, I can be brief. The remedies proposed by Sky Toursare appropriate here. I am directing Tourism NZ to reconsider the facts in relation tothe breaches of the Code and the imposition of any penalties, which will address thereviewable errors canvassed above.Relief[152] Sky Tours has succeeded in its application for a grant of relief.[153] The relief sought by Sky Tours is granted. I make the following orders:79 Guinness, above n 15, at 160.(a) the recommendation by Tourism NZ for revocation of Sky Tours ADSapproval status is quashed;(b) Tourism NZ is directed to:(i) reconsider the alleged breaches of the Code of Conduct forChina ADS-approved inbound tour operators and guides; and(ii) reconsider what penalty (if any) be imposed, having regard tothe alternative corrective measures available under the Code ofConduct.Costs[154] If counsel are unable to agree on costs within four weeks of the date of thisjudgment, counsel are to file memoranda.Cull JSolicitors:Anthony Harper, Auckland for the ApplicantKensington Swan, Wellington for the RespondentAPPENDIX ICODE OF CONDUCT: CHINA ADS APPROVED INBOUND TOUROPERATORS AND TOUR GUIDES4 OBLIGATIONS OF ADS APPROVED ITOS IN RELATION TO ADSTOURS80Good Quality Tour Experience4.1 The primary obligation of the ADS approved ITO is to provide a good quality tourexperience for the Chinese visitors on the ADS tours which the ADS approved ITOconducts and administers, namely that the ADS tour is satisfactory to the Chinesevisitors on the ADS tour in the sense that:a. the Chinese visitors are provided with:i a tour in accordance with the itinerary they paid for in the tourprice; andii attractions, activities, accommodation, meals and transport to thestandard they paid for in the tour price; andb. the itinerary, and the attractions, activities, accommodation, meals andtransport provided by the ADS approved ITO meet the reasonableexpectations of the Chinese visitors; andc. the Chinese visitors leave New Zealand after the end of the ADS tour with agood impression of the tour experience and of the tour arrangements withinNew Zealand.d. from 1 October 2013, the itinerary complies with Article 35 of the TourismLaw of the People's Republic of China, as amended from time to time.4.2 An ADS approved ITO must, at all times, conduct and administer ADS tours to ahigh professional standard of service and accountability and manage the ADS tourgroups in a proper and professional manner.Duty of Care4.3 Every ADS approved ITO owes a duty of care to the Chinese visitors on each ADStour to ensure that:a. the Chinese visitors are treated at all times as one would treat a welcomeguest in one's own home (despite the fact that they have paid for the ADStour); andb. the Chinese visitors' stay in New Zealand is made as enjoyable as possiblefor them.4.4 Without limiting the generality of section 4.3, every ADS approved ITO owes aspecific duty of care to the Chinese visitors on an ADS tour to ensure that they:a. are kept safe and secure while in New Zealand;b. are not exposed to, or subjected to, physical or psychological harm;c. are given full, comprehensive and accurate information in answer to theirquestions and otherwise; andd. have any complaints about the ADS tour dealt with promptly andeffectively.80 "ITO" means Inbound Tour Operator. "ADS" means Approved Destination Status.APPENDIX II8 ADS APPROVED ITO: BREACHES OF THE CODE8.1 TNZ will deal with a potential breach of the Code by an ADS approved ITO asfollows:a TNZ will draw the potential breach to the attention of the ADS approved ITOand ask for an explanation as to whether, and if so, why it occurred.b The ADS approved ITO will have 5 working days to provide TNZ with anexplanation in writing as to whether and why the potential breach occurred.c If TNZ is satisfied with the ADS approved ITO's explanation, no furtheraction will be taken.d If the ADS approved ITO does not provide an explanation in writing or TNZis not satisfied with the ADS approved ITO's explanation, TNZ will notifythe ADS approved ITO of the breach and the action it proposes to take.e The ADS approved ITO will have 10 working days from TNZ's notificationto respond to TNZ in writing and show cause;i why the asserted breach should not be considered a breach of theCode; and/orii why the proposed action should not be taken.f TNZ, having considered any response by the ADS approved ITO undersection 8.1(e), may decide:i to take no further action;ii to require corrective action by the ADS approved ITO to remedy thebreach and to prevent the same breach from happening again;iii to continue the ADS approved ITO's ADS approval on probation fora stated period of time and on stated conditions, in which eventsection 8.6 will apply; oriv to proceed with a recommendation for suspension or revocation, inwhich event section 8.7 will apply;and will notify the ADS approved ITO of its decision.Penalties8.2 Where TNZ decides that an ADS approved ITO has breached the Code, it may makea decision on the appropriate action to be taken in accordance with the guidelinepenalties set out in Appendix 5, which relate to breaches of sections:a 3.3-3.5, 3.7, 3.15-3.16 (in relation to general obligations of ADS approvedITOs); andb 4.5-4.23, 4.26 (in relation to obligations of ADS approved ITOs in relation toADS tours);8.3 TNZ at its discretion (but acting reasonably) may elect to take actions different tothose set out in Appendix 5.8.4 Where TNZ decides that an ADS approved ITO has breached sections of the Codeother than those listed at Appendix 5, TNZ will make a decision on the appropriateaction to be taken on a case by case basis.8.5 Where TNZ decides that multiple breaches of the Code have occurred in respect of anADS approved ITO, TNZ will make a decision on the appropriate action to be takenon a case by case basis.Continuation on Probation8.6 If TNZ decides that the ADS approved ITO's ADS approval is to be continued onprobation:a the conditions of continuation on probation will be:i the ADS approved ITO does not breach the Code again during thestated probation period;ii the corrective action required by TNZ is implemented, carried outand completed by the ADS approved ITO in accordance with TNZ'srequirement; and/oriii any other condition that TNZ considers appropriate.b if, and for as long as, the ADS approved ITO complies with the conditions ofprobation, its ADS approval will continue in force.c if the ADS approved ITO does not comply with the conditions of probation,that will constitute a breach of the Code and:i TNZ will decide whether to recommend suspension or revocation ofits ADS approval andii the provisions of section 8.7 will apply.Suspension, Revocation – Procedure8.7 If TNZ decides to recommend revocation or suspension of the ADS approved ITO'sADS approval:a TNZ will make a report and recommendation to CE, MBIE accordinglyincluding, where suspension is recommended, a recommendation as to theconditions and term of the proposed suspension;b on considering the report and recommendation from TNZ and any responseby the ADS approved ITO and having regard to any other relevant matters,the CE, MBIE may:i revoke the ADS approval; orii suspend the ADS approval on stated terms and conditions; oriii place the ADS approved ITO on conditional probation; oriv seek further information from TNZ and/or the ADS approved ITO; orv take some other action;and MBIE will use its best endeavours to notify the ADS approved ITO andTNZ of its decision accordingly within 15 working days (excluding any timetaken to receive information under 8.7(b)(iv)).Revocation8.10 From the time when the ADS approved ITO's ADS approval is revoked:a the ADS approved ITO must cease conducting and administering ADS toursbut:i the ADS approved ITO may carry out and complete ADS tours whichare either in New Zealand or en route to New Zealand at the time ofrevocation; andii if, at the time of revocation, ADS visas have been granted for aproposed ADS tour to be conducted and administered by the ADSapproved ITO, the ADS approved ITO must arrange for that tour tobe conducted and administered by another ADS approved ITO.b From the time when its ADS approval is revoked, the ADS approved ITOmust not:i conduct and administer ADS tours; orii hold itself out to be an ADS approved ITO.