BLUE REACH SERVICES AND BLUE REACH WIRELESS LIMITED v SPARK NEW ZEALAND TRADING LIMITED [2019] NZCA 2

BLUE REACH SERVICES AND BLUE REACH WIRELESS LIMITED v SPARK NEW ZEALANDTRADING LIMITED [2019] NZCA 2 [12 February 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA283/2018[2019] NZCA 2BETWEEN BLUE REACH SERVICES LIMITED ANDBLUE REACH WIRELESS LIMITEDAppellantsAND SPARK NEW ZEALAND TRADINGLIMITEDRespondentHearing: 15 November 2018Court: Gilbert, Dobson and Mander JJCounsel: M B Wigley and J A Young-Drew for AppellantsZ G Kennedy and D M Kraitzick for RespondentJudgment: 12 February 2019 at 9.30 amJUDGMENT OF THE COURTA The appeal is dismissed.B The appellants are jointly and severely liable to pay the respondent costs fora standard appeal on a band A basis and usual disbursements. We certify forsecond counsel.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)[1] The respondent (Spark) operates a telecommunications business whichincludes the provision of fixed wireless broadband access services utilisingmanagement rights to radio spectrum. In December 2015, Spark applied tothe Commerce Commission (the Commission) for clearance to acquire managementrights to additional radio spectrum to enable it to provide extended coverage for itscustomers. The Commission was satisfied the acquisition was not likely tosubstantially lessen competition in the relevant market and it accordingly grantedclearance in a determination dated 23 March 2016.1[2] The appellants (Blue Reach) also carry on business as telecommunicationsproviders and hold management rights to other radio spectrum. Blue Reach wasnotified of Spark's clearance application but did not contest the application orparticipate in the process.[3] In October 2017, over 18 months after clearance had been granted, Blue Reachcommenced proceedings against Spark in the High Court claiming that Spark misledthe Commission in its clearance application in breach of s 9 of the Fair Trading Act1986 (FTA) and this caused or contributed to the Commission's decision to grantthe clearance. Blue Reach ambitiously sought orders requiring Spark to transferthe management rights to it or requiring Spark to supply access to the spectrum toBlue Reach but these claims were abandoned following the hearing of this appeal.2Blue Reach also sought unspecified compensation for loss allegedly suffered as aresult of not having management rights to this particular radio spectrum.[4] Spark responded by applying to strike out the claim on three grounds. First, itargued Blue Reach's claim was in substance a collateral attack on the Commission'sclearance determination and therefore an abuse of process. Secondly, it arguedthe Commerce Act 1986 is a code and implicitly excludes the operation of the FTA inconnection with the functions and powers exercised by the Commission underthe Commerce Act. Thirdly, Spark contended that Blue Reach cannot obtainthe remedy it seeks because this would require the Court to find that Spark'sacquisition would be likely to have the effect of substantially lessening competition,contrary to the Commission's conclusion which can only be challenged underthe appeal procedure provided in the Commerce Act or in judicial review proceedings.1 Spark New Zealand Trading Ltd [2016] NZCC 7.2 After the hearing of the appeal, counsel for Blue Reach filed a memorandum dated15 November 2018 advising that this part of the prayer for relief is withdrawn.[5] Lang J granted Spark's application and struck out the proceedings in ajudgment delivered on 30 April 2018.3 The Judge found that the claim was precludedby s 106(9) of the Commerce Act:4106 Proceedings privileged(9) Anything said, or any information furnished, or any documentproduced or tendered, or any evidence given by any person tothe Commission, shall be privileged in the same manner as if thatstatement, information, document, or evidence were made, furnished,produced, or given in proceedings in a court.[6] The Judge rejected Spark's alternative contentions based on the Commerce Actbeing a code excluding the operation of the FTA and that the claim amounted to acollateral attack on the Commission's decision.5[7] Blue Reach appeals. Spark supports the judgment on other grounds, beingthe two grounds rejected by the Judge.[8] For the reasons set out below, we agree with Lang J that the claim cannotsucceed because of s 106(9) of the Commerce Act and the Judge was correct to strikeit out.The claim — alleged misleading and deceptive conduct[9] Blue Reach claims Spark misled the Commission in its clearance applicationand in other communications with the Commission by:(a) stating that Blue Reach had sufficient spectrum for its purposes;(b) omitting to state that new entrants and those building new networkswould likely be constrained if they could not access the spectrum Sparkwished to acquire;3 Blue Reach Services Ltd v Spark New Zealand Trading Ltd [2018] NZHC 847, [2018] NZAR 912[High Court judgment].4 At [32] and [49].5 At [34]–[48].(c) focusing on historic uses of the spectrum rather than those availablewith current technology;(d) overstating the substitutability of spectrum bands given most spectrumis closely held by incumbents and not available to new entrants andparties building networks;(e) misstating that any alternative bidder would be likely to offer only fixedwireless access services, not mobile;(f) stating that the spectrum is better suited to fixed wireless accessservices than mobile services when this only applies to existingoperators;(g) suggesting the use of the spectrum for mobile services is in practicelimited;(h) not disclosing related agreements and information;(i) stating the acquisition will not have any adverse effect on competitionfor mobile services;(j) relying on a decision of the Australian Competition and ConsumerCommission relating to an acquisition in 2012 to support its submissionon the likely counterfactual;(k) suggesting the acquisition would not be likely to substantially lessencompetition or have any detrimental impact on competition in anymarket; and(l) not including Blue Reach in the list of suppliers in the application.High Court judgment[10] Lang J considered the immunity conferred under s 106(9) ofthe Commerce Act is clear in its terms and covers all information Spark provided insupport of its clearance application.6[11] The Judge identified several obvious policy reasons why Parliament wouldwish to grant such immunity.7 First, the Commission is a specialist body with wideinvestigative powers including the power to compel any person to provide informationor documents it considers necessary or desirable for the purposes of carrying out itsfunctions and exercising its powers under the Commerce Act. It is important that anapplicant for clearance is candid and fulsome in the information it provides tothe Commission. Secondly, the Commission may consult with any person who, in itsopinion, can assist it in making clearance decisions under s 66 or in authorisingbusiness acquisitions under s 68. Such persons could include an applicant'scompetitors as well as customers and other consumers in the relevant market.The Judge considered it imperative that such persons know they can respond tothe Commission's requests for information without fear of subsequent civil action bythe applicant or any other party who may be adversely affected by the disclosure.The immunity in s 106(9) achieves that purpose.Submissions[12] Mr Wigley, for Blue Reach, emphasises that the courts should take a cautiousapproach to striking out claims before trial, particularly where the law may not besettled. In particular, he relies on Elias CJ's judgment in Couch v Attorney-Generalwhich confirms the importance of determining such cases on their facts found at trialrather than on hypothetical facts assumed for the purposes of a strike-out application.8He submits the present case falls into this category because the scope of immunitiesfor witnesses and others involved in court processes is still evolving as demonstratedby this Court's recent decision in EBR Holdings Ltd (in liq) v McLaren GuiseAssociates Ltd which described the position of expert witnesses as being a "work in6 At [32].7 At [29]–[31].8 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].progress".9 Mr Wigley refers to Lord Cooke's observation in Darker v ChiefConstable of the West Midlands Police to support his submission that immunities arealways granted grudgingly and should not be given any wider application than isnecessary.10 He also refers to the decision of the Court of Appeal of England andWales in Smart v The Forensic Science Service Ltd where Aikens LJ stated, afterreferring to Darker, that the general principle is that where there is a wrong there is aremedy and any immunity is a derogation from a person's right of access to a courtwhich must be justified.11[13] In considering the scope of the immunity in s 106(9) of the Commerce Act andwhether it protects applicants in the position of Spark from claims under the FTA,Mr Wigley suggests it is necessary to start by considering the purpose of these Actswhich were passed by Parliament in the same year. The purpose of the FTA is tocontribute to a trading environment in which the interests of consumers are protected,businesses compete effectively, and consumers and businesses participateconfidently.12 The purpose of the Commerce Act is to promote competition in marketsfor the long-term benefit of consumers within New Zealand.13 Mr Wigley says thatBlue Reach's claim against Spark raises substantial consumer welfare issues that bothActs were designed to safeguard.[14] Mr Wigley submits that s 106(9) does not cover the types of statements whichare the subject of Blue Reach's claim under the FTA. This is because these statementswere made by Spark voluntarily in its own interests and were not tested bycross-examination at any hearing. Mr Wigley argues that Spark derived a considerableadvantage from the alleged breaches of the FTA and achieved an outcome that is tothe detriment of consumer welfare contrary to the purpose of the Commerce Act.His central submission is that the policy reasons for the immunity do not apply toSpark's unilateral action in applying for clearance. Information voluntarily suppliedby an applicant should be distinguished from information provided by other persons9 EBR Holdings Ltd (in liq) v McLaren Guise Associates Ltd [2016] NZCA 622, [2017] 3 NZLR589 at [38].10 Darker v Chief Constable of the West Midlands Police, [2001] 1 AC 435 (HL) at 453.11 Smart v The Forensic Science Service Ltd [2013] EWCA Civ 783 at [36].12 Fair Trading Act 1986, s 1A.13 Commerce Act 1986, s 1A.in response to the application as may be required by the Commission in determiningthe application.[15] Mr Wigley observes that Spark certified to the Commission, as any applicantfor clearance is required to do, as follows:(a) all information specified by the Commission has been supplied;(b) all information known to Spark that is relevant to the Commission'sconsideration of the application has been supplied;(c) all information supplied is correct as at the date it was supplied; and(d) Spark would advise the Commission immediately of any materialchange in circumstances relevant to the application.[16] Mr Wigley submits this certification imposes a high responsibility on Spark,similar to that imposed on a party applying for an order from a court ex parte. He saysthe Commission and other stakeholders such as consumers and competitors relyheavily on clearance applicants to provide accurate and fulsome information to theCommission in the same way as courts rely on ex parte applicants. For these reasons,Mr Wigley says Spark should not be immunised from liability under the FTA in respectof certified statements made to the Commission, even if the 'privilege' in s 106(9)provides immunity for other claims such as for defamation or negligence. He says theinformation volunteered by Spark in support of its application is in a different categoryfrom that provided to the Commission by third parties under compulsion and does notjustify the same immunity.[17] Mr Kennedy, for Spark, supports the Judge's analysis on the interpretation andapplication of s 106(9). He argues that the word "privileged" in this subsection isintended to mean the immunity conferred on witnesses in respect of evidence givenby them in court proceedings. Mr Kennedy says there is no indication in the statutethat Parliament intended to differentiate between information supplied by an applicantand that provided to the Commission by a third party.Analysis[18] Section 106 of the Commerce Act, which is headed "Proceedings privileged",provides a wide-ranging suite of targeted protections for the Commission and personsengaged in assisting or providing information to the Commission to enable it to carryout its functions under the Act. These provisions are mostly directed at protectingthe Commission and its officers, employees or committee members.However, s 106(9) extends certain protections to any person who furnishesinformation, produces or tenders documents or gives any evidence to the Commission.These provisions draw on the rules that would apply under common law ifthe proceedings were conducted in a court, such as judicial immunity, the privilegeagainst self-incrimination, collateral use of documents produced and witness and partyprotection from claims.[19] Subject to the limited exceptions in s 106(3), no proceedings, civil or criminal,can be brought against the Commission for any act or omission in the exercise orintended exercise of its functions unless it is shown that the Commission acted withoutreasonable care or in bad faith.14[20] Immunity from civil and criminal proceedings is also conferred on any memberof the Commission or any officer or employee or committee member ofthe Commission for anything that person may do or say, or fail to do or say, inthe course of the operations of the Commission including where such persons fail toexercise reasonable care. However, the immunity does not apply if it can be shownthat the person acted in bad faith.15 The immunity covers claims that might otherwisebe brought by the Commission in reliance on s 59(3) of the Crown Entities Act 2004.16[21] Section 106(4) is significant because it abrogates the long-establishedcommon law privilege against self-incrimination now codified in s 60 ofthe Evidence Act 2006. This privilege is removed for any person required to furnishinformation, produce documents, or give evidence under the Act, or, on appearingbefore the Commission, from answering any question or producing any document.14 Section 106(1).15 Section 106(2).16 Section 106(3A).[22] Although the privilege against self-incrimination is removed, Parliament hasenacted various countervailing protections. First, subject to the limited exceptions ins 106(6), any statement made by a person in answer to a question put by or beforethe Commission shall not be admissible against that person in any criminalproceedings or proceedings for pecuniary penalties.17 Secondly, subject to the limitedexceptions in s 106(8), no court or other person can require any member ofthe Commission or any employee of the Commission or any other person present atany meeting of the Commission to divulge or communicate any information furnishedor obtained, documents produced, obtained or tendered or evidence given inconnection with the operations of the Commission.18 Thirdly, there is the protectionin s 106(9) with which this appeal is concerned. As already noted, this is cast in verywide terms — anything said, any information furnished, any document produced ortendered and any evidence given by any person to the Commission is privileged inthe same manner as if given in proceedings in a court.[23] Although the word "privileged" is used in the heading to s 106 it is apparentthat this is no more than a convenient label for the provisions that follow and was notintended to be interpreted in a technical sense and meant to be distinguished from an"immunity" strictly so called. For example, as Mr Wigley acknowledges, subs (1)confers an immunity on the Commission for civil or criminal claims even thoughthe word "immunity" is not used. Subsection (2) also provides an immunity formembers, officers or employees of the Commission. Moreover, as Tipping J observedin Chamberlains v Lai, an immunity can properly be regarded as a privilege.19[24] Parliament has conferred the same standard of protection in numerous othersimilar contexts, including, for example, under the Commissions of Inquiry Act1908,20 the Ombudsman Act 1975,21 the Fair Trading Act 1986,22 the ResidentialTenancies Act 1986,23 the Human Rights Act 1993,24 the Privacy Act 1993,2517 Section 106(5).18 Section 106(7).19 Chamberlains v Lai [2006] NZSC 70, [2007] 2 NZLR 7 at [111].20 Commissions of Inquiry Act 1908, s 6.21 Ombudsman Act 1975, ss 19(5) and 26(3).22 Fair Trading Act 1986, s 47G(2).23 Residential Tenancies Act 1986, ss 97(7) and 101.24 Human Rights Act 1993, ss 128(1) and 130(4).25 Privacy Act 1993, s 96(4).the Health Practitioners Competence Assurance Act 2003,26 the Real Estate AgentsAct 2008,27 the Immigration Act 2009,28 the Legal Services Act 2011,29 the InquiriesAct 201330 and the Customs and Excise Act 2018.31 In most instances, Parliament hasused a variant of the word privilege ("privileges" or "privileged") to describethe protection but occasionally has used the formulation "privileges and immunities".However, in each case the reference is to the same benchmark protection, namelythe long-established and well-understood privilege or immunity that protectswitnesses from civil claims arising out of their evidence given in court.[25] Contrary to Mr Wigley's tentative suggestion, we do not consider that the word"privileged" in s 106(9) was intended to be interpreted in a technical sense andconfined to the absolute privilege under s 14 of the Defamation Act 1992 for evidencegiven in court. If that had been the intention, one would have expected Parliament tohave said so expressly, including by referring to the Defamation Act as it did insubs (10).[26] Rather, it seems clear from the text and in the light of the purpose ofthe provision that the expression "privileged in the same manner as if given inproceedings in a court" has been used to import the absolute immunity from suit forany civil claim afforded to witnesses in respect of their evidence given in courtproceedings. Although there is an unresolved question in New Zealand about theposition of expert witnesses, it is long-settled that any lay person giving evidence in acourt enjoys an absolute immunity from any civil suit for damages, regardless ofwhether it can be shown that their evidence was false, defamatory, without reasonablefoundation, or even malicious.32 This immunity was developed centuries ago underthe common law to serve the public interest in the due administration of justice.The immunity was considered necessary to encourage witnesses to give their evidence26 Health Practitioners Competence Assurance Act 2003, sch 1, cl 11.27 Real Estate Agents Act 2008, ss 96 and 97.28 Immigration Act 2009, sch 2, cl 15.29 Legal Services Act 2011, s 108(1).30 Inquiries Act 2013, s 27.31 Customs and Excise Act 2018, sch 8, cl 25.32 R v Skinner (1772) Lofft 54; Dawkins v Lord Rokeby (1873) LR 8 QB 255 at 264; Darker v ChiefConstable of the West Midlands Police, above n 10, at 446 (HL); and New Zealand Defence Forcev Berryman [2008] NZCA 392 at [67].freely and frankly without fear of later being vexed by claims from disgruntledlitigants or others.[27] The same public policy considerations apply with equal force in the context ofthe Commission's investigative and disciplinary functions under the Commerce Act.These include, for example, the investigation, detection and policing of seriouswrongdoing such as cartel conduct which is typically attended by high levels ofsecrecy, concealment and little or no documentary evidence. The Commission hasbeen given broad powers to compel the provision of information, documents andevidence from any source, including employees, competitors, other marketparticipants and consumers. The information, documents and evidence available fromthese sources will inevitably be of varying quality and reliability. It may be no morethan supposition based on hearsay and not even admissible as evidence in a court.The Commission is not expected to accept any claims, information or evidenceuncritically and it is not required to rely on the opinions of others. The Commission'sresponsibility is to exercise its wide investigative powers and apply its own expertiseto rigorously test all claims and evidence placed before it and make any furtherinquiries it considers necessary.[28] Further, it can be expected that anyone providing such information, documentsor evidence will seldom have access to all relevant information bearing on the keyissues that must be investigated and determined by the Commission as an independentspecialist body. It would place an unfair and unjustifiable burden on any such personif they were vulnerable to suit by third parties for providing information that ultimatelycould be viewed as incomplete, misleading or even false in the light of all relevantfacts. This would be contrary to the public interest because it would be likely to havea chilling effect on the provision of relevant information and consequently impedethe Commission from fulfilling its functions and securing the objectives of the Act.[29] For these reasons, we are satisfied that Parliament's purpose in enactings 106(9) was to confer immunity upon all those who provide information, documentsor evidence to the Commission in connection with the discharge of its responsibilitiesunder the Act. This purpose was achieved by giving such persons the same protectionthey would have if the information had been given by them in evidence in a court.This includes protection from claims of alleged misleading or deceptive conduct inbreach of s 9 of the FTA.[30] The question then becomes whether Blue Reach's claim alleging that Spark'sstatements to the Commission breached s 9 of the FTA would lie if those statementshad instead been made by a witness in court. Despite Mr Wigley's carefulsubmissions, we are satisfied the answer is plainly no.[31] Unlike subs (4), there is no indication in the text that the privilege conferredunder s 106(9) was intended to be confined to information provided or documentstendered to the Commission under compulsion. The protection extends to"anything said", "any information furnished", "any document produced or tendered"and "any evidence" given "by any person" to the Commission. The purpose ofthe protection would be frustrated if it were available only to those who provideinformation or documents under compulsion and did not extend to those willing tocooperate and assist the Commission without insisting that the Commission firstexercise its coercive powers to compel the production of the documents or evidence.[32] Mr Wigley contends that the Judge erred by treating the information providedby Spark as equivalent to information provided by witnesses such that witnessimmunity would be engaged. Mr Wigley notes that s106(9) does not refer specificallyto witnesses. We are not persuaded by these points. The effect of the privilege,whatever its scope, is to provide protection to the persons supplying the information,documents or evidence. Importantly, we see no justification for reading down"any person" as meaning "any person other than an applicant". Nor do we see anyjustification for reading down "any information furnished" or "any documentproduced or tendered" as meaning "any information furnished or document producedor tendered under compulsion". These interpretations, urged by Mr Wigley, are notconsistent with the text or the purpose of the provision which is to serve the publicinterest in full and frank disclosure to the Commission by anyone of anything thatcould be relevant and helpful to the Commission in performing its functions underthe Act.[33] Although all civil claims are barred, it is an offence to attempt to deceive orknowingly mislead the Commission punishable by a fine of up to $100,000 for anindividual or up to $300,000 for a body corporate.33 Accordingly, the certificationprovided by an applicant for clearance as to the completeness and correctness of allinformation supplied is important. If the person providing the certificate knows it isincorrect, serious consequences can follow. However, we do not see the certificate asjustifying a carve out from the broad protection conferred under s 106(9) as Mr Wigleycontends.[34] Our conclusion on this issue is sufficient to dispose of the appeal. For thisreason, we do not need to consider the other grounds relied on by Spark to supportthe judgment.Result[35] The appeal is dismissed.[36] The appellants are jointly and severely liable to pay the respondent costs for astandard appeal on a band A basis and usual disbursements. We certify for secondcounsel.Solicitors:Wigley and Company, Wellington for AppellantsMinterEllisonRuddWatts, Auckland for Respondent33 Commerce Act, ss 103(2) and 103(4).