GULF GROUP MARINE BROKERS LIMITED v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2021] NZHC 85

GULF GROUP MARINE BROKERS LIMITED v MINISTRY OF BUSINESS, INNOVATION ANDEMPLOYMENT [2021] NZHC 85 [4 February 2021]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2019-485-390[2021] NZHC 85IN THE MATTER OF an application pursuant to section 3 of theDeclaratory Judgments Act 1908BETWEEN GULF GROUP MARINE BROKERSLIMITEDPlaintiffAND MINISTRY OF BUSINESS, INNOVATIONAND EMPLOYMENTDefendantHearing: 30 September 2020Appearances: A O'Connor for ApplicantS P Connolly for DefendantJudgment: 4 February 2021JUDGMENT OF CLARK JIntroduction[1] Gulf Group Marine Brokers Ltd provides a marketing service under a servicecontract to those wishing to sell a motor vessel. It does not sell motor vessels at all.Gulf Group says it offers no service to any purchaser. Nor, in simply marketing amotor vessel and introducing vendors and purchasers to each other, is it acting as an"agent" in any transaction. Gulf Group seeks a declaration that it is not regarded as a"supplier" under the Consumer Guarantees Act 1993.[2] The Ministry of Business, Innovation and Employment (the Ministry) is thenamed defendant. The Ministry says it has been improperly named as the defendantand has applied to be struck out as a party.Genesis of the proceeding[3] Gulf Group takes issue with the decision in Walters v Taylor Marine in whichthe High Court held that Taylor Marine Ltd, a company of marine brokers, came withinthe definition of "supplier" in the Consumer Guarantees Act.1 Specifically, theHigh Court concluded that those acting as agents in the sale of goods are "suppliers"for the purposes of the Consumer Guarantees Act.2[4] The Consumer Guarantees Act gives a right of redress against a "supplier" ofgoods where the goods do not comply with any guarantee set out in s 5 of that Act. InWalters v Taylor Marine the yacht sold to the plaintiffs was not free from allencumbrances as the agreement between the seller and Mr Walters stated. Theagreement had been prepared by Taylor Marine, the seller's exclusive agent for thepurpose of selling the vessel.[5] The defendants argued that the plaintiffs' approach to the definition of"supplier" was too broad and did not include the yacht brokers.[6] As the present interlocutory proceeding does not require a determination of theactual application for a declaration, it is unnecessary to discuss the reasoning in TaylorMarine. The short point is that the High Court found Taylor Marine was effectivelysubstituted for the seller, even though the seller was not in trade, and that TaylorMarine had assumed the obligations under the Act which would have attached to theseller had he been in trade.[7] Gulf Group contends Walters v Taylor Marine is wrong in law and that adeclaration is required to bring certainty to the boating industry. While Gulf Groupdoes not specifically refer to Taylor Marine in its statement of claim it pleads thatissues arise from time-to-time with motor vessels post-sale and that "recently Courtshave indicated a view that an entity like Gulf Group would be a 'supplier' for thepurposes of the Consumer Guarantees Act and as a result Gulf Group is liable for'supplier guarantees' to any purchaser".1 Walters v Taylor Marine Ltd [2010] 2 NZLR 656.2 At [8] and [46].[8] Gulf Group seeks:A declaration that a marine brokerage company providing a marketing service(designed to introduce buyers and sellers) to a vendor selling a vessel is not a"supplier" to any third party purchaser who purchases a vessel for the purposesof the Consumer Guarantees Act.The strike-out application[9] The Ministry applies under r 4.56 of the High Court Rules 2016 to be struckout as a defendant. It says it is not properly named as a defendant as it has no powersof enforcement or other regulatory function under the Consumer Guarantees Act.[10] Gulf Group opposes the application. It says the Consumer Guarantees Act"binds the Crown"; the Ministry is the Ministry "that has been subrogated the role andpowers of policy pursuant to the Consumer Guarantees Act"; and the Ministry is thecorrect contradictor.[11] Accordingly, the only issue for determination is whether the Ministry shouldbe struck out as defendant. The Ministry does not ask that the entire proceeding bestruck out. While the Ministry does not mount a direct challenge to the proceedingitself the Ministry does query whether the proceeding is suitable for a declaratoryjudgment. That consideration is highlighted by the absence of a proper contradictor.The Declaratory Judgments Act[12] Section 3 of the Declaratory Judgments Act provides:3 Declaratory orders on originating summonsWhere any person has done or desires to do any act the validity,legality, or effect of which depends on the construction or validity ofany statute, or any regulation made by the Governor-General inCouncil under statutory authority, or any bylaw made by a localauthority, or any deed, will, or document of title, or any agreementmade or evidenced by writing, or any memorandum or articles ofassociation of any company or body corporate, or any instrumentprescribing the powers of any company or body corporate; orWhere any person claims to have acquired any right under any suchstatute, regulation, bylaw, deed, will, document of title, agreement,memorandum, articles, or instrument, or to be in any other mannerinterested in the construction or validity thereof,—such person may apply to the High Court by originating summons fora declaratory order determining any question as to the construction orvalidity of such statute, regulation, bylaw, deed, will, document oftitle, agreement, memorandum, articles, or instrument, or of any partthereof.[13] The jurisdiction to make orders under the Declaratory Judgments Act is whollydiscretionary. The Court will not answer purely abstract questions in anticipation ofactual controversy. It will not deal with mixed questions of fact and law:3The procedure is designed to provide a speedy and inexpensive method ofobtaining a judicial interpretation where the matter in dispute cannotconveniently be brought before the court in its ordinary jurisdiction and wherea declaratory judgment would be appropriate relief.[14] In their "classic text",4 Zamir and Woolf: The Declaratory Judgment,Lord Woolf and Jeremy Woolf, describe the declaratory jurisdiction:5The courts original declaratory jurisdiction may be described as follows:within the limits of their general jurisdiction and subject to any expressstatutory provisions to the contrary the courts have a discretion to grantdeclarations upon any matter what so ever.[15] In Mandic v Cornwall Trust Board the New Zealand Supreme Courtemphasised the breadth of the jurisdiction under the Declaratory Judgments Act andthat the jurisdiction was not constrained beyond the threshold described by s 3 namely,that the person applying "has done or desires to do any act the validity, legality oreffect of which depends on the construction or validity of any statute".6[16] Access to the jurisdiction does not depend on there being an existing disputenor is it necessary that there be a lis. While the jurisdiction is expansive,7 it isdiscretionary and the Court may, on any grounds which it deems sufficient, refuse togive or make any such judgment or order.83 New Zealand Insurance Co Ltd v Prudential Assurance Co Ltd [1976] 1 NZLR 84 (CA) at [85].4 As described by Chambers J in Telecom v Commerce Commission [2012] NZCA 278 at [295].5 Lord Woolf and Jeremy Woolf Zamir and Woolf: The Declaratory Judgment (4th ed, Sweet &Maxwell, London, 2011), at [3–19].6 Mandic v Cornwall Park Trust Board [2011] NZSC 135, [2012] 2 NZLR 194 at [8].7 Gazley v Attorney-General (1996) 10 PRNZ 47 (CA), at 50–51.8 Declaratory Judgments Act 1908, s 10.[17] In Canterbury Regional Council v Attorney-General, Miller J referred to thefrequency with which the High Court has refused relief pursuant to its discretion unders 10 where there was no dispute between the parties, or no proper contradictor, or theplaintiff sought an advisory opinion.9 Miller J referred to the often cited dictum ofLord Dunedin in Russian Commercial and Industrial Bank v British Bank for ForeignTrade Ltd:10The rules that have been elucidated by a long course of decisions in theScottish Courts may be summarized thus: The question must be a real and nota theoretical question; the person raising it must have a real interest to raise it;he must be able to secure a proper contradictor, that is to say, some onepresently existing who has a true interest to oppose the declaration sought.Is the Ministry a proper contradictor?[18] Counsel for the Ministry, Mr Connolly, submitted that while the Ministry isresponsible for administering the Consumer Guarantees Act that fact alone does notmake it a proper contradictor.[19] A similar argument was considered in Canterbury Regional Council.11 InCanterbury Regional Council the High Court granted the Attorney-General'sapplication to be struck out as a party. Although the plaintiffs argued that the Attorney-General was the proper defendant because he was sued for the Minister for theEnvironment and the Minister of Local Government and the plaintiff soughtdeclarations about the rights of elected councillors under legislation that the twoMinisters administered, the Court did not agree. There was "no present or pendingcontroversy between [the plaintiff] and the Crown, and no ministerial or officialdecision [was] impugned or even pleaded".12[20] While the claim may have pointed to weaknesses in the legislation, it did notaddress the Ministers' administration of the legislation. Miller J said one way oftesting the point was to inquire whether any specific relief might be granted againstthe Ministers. He concluded there could be no such relief.9 Canterbury Regional Council v Attorney-General [2009] NZAR 611 at [22].10 At [22], citing Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd[1921] 2 AC 438 at 448.11 Canterbury Regional Council v Attorney-General, above n 9, at [48]–[49].12 At [49].[21] Having rejected the proposition that the Attorney-General is invariably aproper contradictor in a case such as that before him, Miller J concluded there was noother defendant to serve as a proper contradictor.13 Ultimately, the Judge was satisfiedthe Attorney-General's presence was not necessary to adjudicate upon the issues inthat proceeding. It could not be said that the opposing interests were held in commonwith the public at large. The proper contradictors were able to be represented byamicus or counsel for unrepresented persons.14[22] The Ministry argues that the reasoning in Canterbury Regional Council isequally applicable to this proceeding. As with the Attorney-General in CanterburyRegional Council, the Ministry is not invariably a proper contradictor for issuesinvolving the Consumer Guarantees Act; it did not have a role protecting, or arguingfor the interests of consumers against those of suppliers. Mr Connolly pointed out thatthe Crown, including the Ministry, is in many cases a supplier itself under theConsumer Guarantees Act.[23] The plaintiff takes the view that the Ministry has an express policy governancerole in relation to the Act and this role can be clearly distinguished from the "publicinterest" that the Attorney-General represents or advances in many cases.[24] For Gulf Group Mr O'Connor emphasised the purpose of the DeclaratoryJudgments Act which, I add, "enables anyone whose conduct or rights depend on theeffect or meaning of an instrument, including an agreement, to obtain an authoritativeruling".15[25] The second point Mr O'Connor emphasised was that r 4.56 of the High CourtRules, which the Ministry relies on for its strike-out application, does not apply. Thatis because Gulf Group does not seek relief. It is seeking certainty under the ConsumerGuarantees Act. Mr O'Connor explained that Taylor Marine has acted as a "dangerousprecedent" in the Disputes Tribunals. The decision has been held to apply to scenarioswhere anything is sold or marketed on behalf of another party. Mr O'Connor argued13 At [58].14 At [64].15 Mandic v Cornwall Park Trust Board, above 6, at [9].that Parliament could never have intended that those who act as agents or brokerscould be held to be suppliers. A real estate agent is not, he said, a supplier of houses.Mr O'Connor also gave the example of a second-hand car dealer who he said does notbecome a supplier. Gulf is not suppling boats it is simply providing a marinebrokerage service. Yet if the boat fails a year after sale the customer has sued thebroker. The brokerage community, it is said, has been the subject of numerous adversedecisions in the Tribunal which considers itself bound by Walters v Taylor Marine Ltd.[26] Although Mr O'Connor was conscious of not straying into the facts, becausethis was not a hearing of the application for a declaration itself, he observed that hadan application for service been made the Court would have directed that service be onthe most relevant institution able to contradict the argument Gulf Group makes. Thatinstitution is said to be the present defendant particularly as Mr Connolly describedthe Ministry as an "interested observer".Decision[27] I address first the procedural barriers which Mr O'Connor says lie in the pathof the Ministry's strike-out application. I agree that Part 18 of the High Court Rulesapplies, as counsel identified. But I do not agree that once served a defendant "can'tget out of it" (as Mr O'Connor put it) because Part 18 contains no provisions enablinga defendant to be struck out.What should have happened?[28] The relief claimed is solely under the Declaratory Judgments Act. ThereforePart 18 of the High Court Rules applies.16 A proceeding commenced under Part 18must be commenced by a statement of claim and accompanied by an application fordirections as to service and representation under r 18.7.17[29] Under r 18.7(3) the plaintiff must provide all the information required byr 18.7(3):16 High Court Rules 2016, r 18.1(b)(vi).17 At r 18.4(1).In support of the application, the plaintiff must provide (by affidavit orotherwise) the information that may be necessary to enable the court to decidewhat persons or classes of persons are interested in, or may be adverselyaffected by, the relief sought by the plaintiff and by what means the interestsof each such person or class of persons may be adequately represented.[30] Mr Connolly makes a valid point when he says had the plaintiff proceeded inthe proper way the Ministry would not be in this position. Mr O'Connor resisted theapplication of r 18.7(3) saying r 18.7 does not apply because none of the criteria setout in 18.7(1) as to when the rule applies, is applicable to Gulf Group.[31] But the simple fact is that r 18.7 is made applicable by r 18.4 which requiresan application to be made under r 18.7. The difficulty the Court finds itself in, inhaving to strike out the defendant while leaving no contradictor, might have beenavoided had Gulf Group adopted the proper procedure. If Gulf Group considers thereis merit in pursuing its application for a declaration despite the observations made inthis judgment it needs to start again and proceed under Part 18 applying for directionsas to the person or class of persons who should be served with the statement of claimand providing all the information necessary to enable the Court to decide that question— as required by r 18.7(3). In doing so, Gulf Group will need to bring the attentionof the Court to this judgment.[32] For the reasons that follow, I am satisfied the Ministry is not the propercontradictor. That is to say, it has no "true interest to oppose the declaration sought".18[33] The Ministry resisted a suggestion made in the case management phases of thisproceeding that the issue of statutory interpretation raised by the application and theMinistry's standing as a proper defendant, could be argued together. The reason forresisting the suggestion is that the Ministry would have been, and remains, likely toabide by the decision of the Court. It is an interested observer in the sense that as apolicy department it observes whether the Act is working as it should and whether itshould recommend legislative amendment. The Ministry does not advocate for eitherconsumers or suppliers. The only course would be for it to abide. It has no argument18 Canterbury Regional Council v Attorney-General, above n 9, at [22], citing Russian Commercialand Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 443, perLord Dunedin.to make. If anything, Mr Connolly suggested the Ministry may be seen as a suppliernot a consumer. It is a supplier at times so were it to have an interest it would be in itscapacity as a supplier.[34] Further, the Ministry could not be bound in any relevant sense. Were thedeclaration to be granted it could have no effect or impact on the Ministry. Even if itsposition might be, at times, analogous to that of a supplier its interest could neverapproach those of a marine broker.[35] Mr Connolly candidly acknowledged that if the Court were satisfied theMinistry is not the proper contradictor, he could think of no other defendant who is.Gulf Group's case is that it would be greatly assisted in having what is essentially amatter of statutory interpretation clarified by the Court. The question Gulf Groupseeks to have decided via its proposed declaration is whether Walters v Taylor MarineLtd was correctly decided. Mr Connolly said this is the issue the plaintiff wants tohave resolved.[36] In Canterbury Regional Council v Attorney-General where the plaintiff soughtdeclarations that its elected members were not disqualified from conducting hearingsunder the Resource Management Act 1991, Miller J said:19[43] contrary to [the plaintiff's] argument, the Attorney may not be suedwhenever a plaintiff wants a declaration about the meaning of publiclegislation or raises a "public law issue", and whether or not relief is soughtagainst the Crown. The Attorney-General is not invariably a propercontradictor in the sense used by Lord Dunedin — a person with a true interestto oppose the declaration sought. The Crown does not by definition have anopposing interest in every such case; on the contrary, legislation normallybinds it too and its interest, if any, may be aligned with the plaintiff's .(footnotes omitted)[37] As Miller J observed in that case, if the plaintiff's position were correct, theAttorney-General might be joined in every case involving the construction oflegislation whether or not there was another contradictor and whether or not theAttorney-General agreed with the plaintiff. In my view the position is even moreobvious in relation to the Ministry. The Attorney-General is recognised to have19 Canterbury Regional Council v Attorney-General, above n 9.various roles and interests such as to enforce public rights, represent the public interest,appear where important issues of public interest arise and have responsibility forcriminal prosecutions — to name but some. In relation to the Consumer GuaranteesAct, the Ministry has no role beyond a policy function. In that regard, its relationshipis with Ministers and Government, not advocating for or against interest groups in theCourts.[38] Nor does the Ministry's legislative responsibility for administration of theConsumer Guarantees Act make it a proper contradictor. In Canterbury RegionalCouncil the Judge said the plaintiff's claim may point to weaknesses in the legislationbut the claim did not bear on administration of the Act.20[39] Although Mr O'Connor submitted the matter raised by the application for adeclaration was one of statutory interpretation, he also confirmed that Gulf Group hasno issue with the Consumer Guarantees Act itself. Its issue is with the approach to itas reflected in Walters v Taylor Marine.[40] In those circumstances it seems the obvious and proper course is for litigantswho are adversely affected by the Tribunal's decisions made in reliance on the HighCourt decision, to appeal. It does not strike me as a proper use of the declaratoryjudgment jurisdiction to revisit a High Court decision decided two decades ago in thecontext of an inter-party dispute. If, as Mr O'Connor says, Walter v Taylor Marinehas been cited in disputes involving tractors and diggers and is regarded as havingbroad application, and that a large number of Tribunal decisions have adverselyaffected some parties, the obvious course as I have mentioned is to take those decisionson appeal.[41] As Mr Connolly submitted if Taylor Marine has been problematic throughoutthe marine and other industries, one would have expected the decisions made inreliance on that case to have been challenged.20 Canterbury Regional Council v Attorney-General, above n 9, at [49].Result[42] The application to remove the defendant as a party to the proceeding is granted.[43] Having succeeded in its application and as costs follow the event, the defendantis entitled to costs which are awarded on a 2B basis._____________________________Karen Clark JSolicitors:Surridge & Co, Mana for PlaintiffCrown Law Office, Wellington for Defendant