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

PERSONALISED PLATES LTD v NZ TRANSPORT AGENCY [2013] NZHC 1927 [1 August 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-002959[2013] NZHC 1927BETWEEN PERSONALISED PLATES LIMITEDPlaintiffAND NEW ZEALAND TRANSPORTAGENCYDefendantHearing: 12 July 2013Counsel: RG Simpson and TW Geuther for PlaintiffDA Campbell for DefendantJudgment: 1 August 2013JUDGMENT OF ASHER JThis judgment was delivered by me on Thursday, 1 August 2013 at 3.30pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Bell Gully, Auckland.Kensington Swan, Auckland.Introduction[1] This is an application to remove this proceeding from the commercial list andto transfer it from the Auckland registry to the Wellington registry. It is submitted bythe defendant that the plaintiff was in error in filing the proceeding on the Aucklandcommercial list as in essence it is an administrative law proceeding. It submits thatthe defendant has its principal place of business in Wellington, and no material partof the causes of action arose in Auckland.[2] The proceeding arises from a contract entered into on 25 August 2008 (the2008 contract) between New Zealand Transport Agency (NZTA) and PersonalisedPlates Ltd (PPL), which replaced an earlier agreement dated 3 June 1997. By thatagreement, NZTA granted PPL sole and exclusive rights to market and promotepersonalised plates and associated products throughout New Zealand for anunlimited period. It was stated that the parties acknowledged it was their intentionthat the agreement should continue indefinitely, subject to various rights oftermination for cause. PPL was to pay NZTA $400,000 per annum and in addition asignificant portion of the gross revenue for sales exceeding $4 million.[3] In a process that the plaintiff asserts went back to 2007, Parliament on25 June 2009 enacted the Land Transport Amendment Act 2009. By s 259, the 2008contract was made terminable upon reasonable notice, notwithstanding the 2008indefinite term of the contract. On 21 December 2010, NZTA indicated that PPLcould expect to receive one year's notice of termination. By letter of 25 February2013, NZTA notified PPL that the contract was terminated with effect from31 March 2014, and that NZTA intended to carry out a fully competitive tender forthe provision of personalised plates services. This led to PPL issuing theseproceedings.[4] The statement of claim lists judicial review as its first "cause of action". Italleges an irrational and unreasonable decision to terminate on 13 months' noticewithout paying compensation. It is asserted that the Crown, by its actions, intends toappropriate PPL's assets for no consideration. It is claimed that there is noreasonable or proper purpose or rationale for NZTA's decision. The relief sought is adeclaration that NZTA may not terminate the contract other than for cause or on condition of payment of compensation, an order quashing the NZTA's decision toserve the termination notice without paying compensation, and a permanent injunction.[5] The second cause of action pleads on the basis of judicial review that areasonable notice to terminate under s 259 would provide at least 10 years' notice. Itis alleged therefore that NZTA's decision to issue the termination notice withoutpaying compensation was made on the basis of an error of law.[6] The third cause of action is breach of contract. It is alleged that there is aperpetual term in the contract, and reasonable notice under s 259 would be at least 10years' notice. It is asserted that the termination notice was a repudiation of the 2008contract, and a declaration is sought to that effect together with damages for breachof contract (if it takes place) and a permanent injunction.[7] The fourth cause of action is for the common law right to compensation forexpropriation, and refers to an implicit or statutory right to compensation orrestitution.[8] There can be no doubt that the first, second and fourth causes of action havean administrative law base. The third cause of action is pleaded in contract, butrelies on the statutory provision of the new s 259 and imports it into the contractalleging a breach of the reasonable notice provision.Should this proceeding be on the commercial list?[9] Rule 29.13(1) of the High Court Rules provides that a commercial list Judgemay, on the application of any party or on the Judge's own initiative, remove aproceeding from the commercial list. The provision does not set out any guide as to how the discretion is to be exercised. On its face it is unfettered. Rodney Hansen J observed in Cadbury Ltd v Effem Foods Ltd1 that ultimately there is a balancing exercise to be conducted which does not involve a burden on either side. The central1 Cadbury Ltd v Effem Foods Ltd (2003) 16 PRNZ 991 (HC) at [14].issue is whether the proceeding is indeed eligible for the commercial list under s 24B.Section 24B[10] The general criteria for eligibility to be placed in the commercial list are setout in s 24B(1) of the Judicature Act 1908:24B Proceedings eligible for commercial list(1) The classes of proceedings eligible for entry on a commercial list are as follows:(a) Any proceedings arising out of or otherwise relating to:(i) The ordinary transactions of persons engaged in commerce or trade or of shippers:(ii) The carriage of goods for the purpose of trade or commerce:(iii) The construction of commercial, shipping, or transport documents:(iv) The export or import of merchandise:(v) Insurance, banking, finance, guarantee, commercial agency, or commercial usages:(vi) Disputes arising out of intellectual property rights between parties engaged in commerce:...[11] Mr Simpson for the plaintiff relied primarily on s 24B(1)(a)(i), althoughreference was also made to s 24B(1)(a)(v). The latter reference can be disposed ofimmediately. This is not in my view a contract of commercial agency. There wasnot an agency agreement in the usual sense, where a principal and agent relationshipwas established. If it deserved any categorisation, it would be as a type of exclusivemarketing and distribution agreement.[12] Returning to s 24B(1)(a)(i), in assessing what is an "ordinary transaction" orpersons engaged in commercial trade, it is necessary to look at the nature of theunderlying transaction. This follows from the use of the words in s 24B(1)(a) "arising out of".2 The fact that the events complained of in respect of the underlying transaction might be extraordinary or infrequent does not mean that the proceedingloses the commercial flavour required by s 24B(1). It will often be the case that theparticular nature of a breach of a commercial transaction will be a one-off orextraordinary circumstance.[13] In my view the underlying agreement, which was for the distribution andmarketing of consumer goods, albeit from a government agency, was an ordinarycommercial transaction.[14] Mr Campell for the defendant relied on the statement in InsigniaInternational Ltd v Gulf Star Products Ltd that for a case to remain on the list if anapplication is made for its removal " the case should exhibit some commercialflavour over and above the normal commercial and contractual litigation whichforms part of the standard diet of the Court."3 It is also suggested in that case thatthere needed to be a "superadded commercial flavour".4[15] This sort of phraseology is not to be found in the very considerable numberof cases dealing with the discretion, and with respect I do not find it helpful. AsBarker J said in Taspac Oysters Ltd v James Hardie & Co Pty Ltd:5The test for eligibility in the List has been stated many times , i.e. does theproceeding have a sufficient "commercial flavour" to come within thegeneral purpose and intendment of the legislation.This phrase "sufficient commercial flavour" has been frequently used and warrantsno further adjectival refinement.6[16] In my view the underlying transaction in this case has a distinct commercial flavour. It was a significant transaction between a commercial party and agovernment agency that entered into the contract for commercial purposes. If there2 See Securities Commission v Midavia Rail Investments [2005] 3 NZLR 433 (CA).3 Insignia International Ltd v Gulf Star Products Ltd (2000) 14 PRNZ 357 at [9].4 At [13].5 Taspac Oysters Ltd v James Hardie & Co Pty Ltd [1990] 1 NZLR 442 (HC) at 445.6 See Allied Nationwide Finance Ltd (in receivership) v Southland Building Society HC AucklandCIV-2010-404-008228, 19 August 2011 at [12].had been an ordinary dispute as to its terms or the case centred on an alleged breach of its terms, I would consider that it qualified for the commercial list.The judicial review aspect[17] However there is a complication. These proceedings are primarily of a publiclaw nature. As I have said, the first, second and fourth causes of action turn onjudicial review or breach of public duties. The third cause of action, while ostensiblybased on contract, relies on the new s 259 inserted by the Land TransportAmendment Act 2009.[18] Mr Campbell submitted that the proceeding's judicial review character made it ineligible for the commercial list. He relied on a line of cases that he submitted indicated judicial review proceedings were not suited to the commercial list.[19] In Auckland Electric Power Board v Electricity Corporation of New Zealand Ltd Barker J, considering proceedings relating to a written agreement for the bulksupply of electricity which included a claim for judicial review stated:7This is a Commercial List case and administrative law cases are rarely appropriate on the List. I have wide powers to regulate the business on the Commercial List and give directions as to the speedy and inexpensive determination of the real questions between parties to proceedings entered on the List (See S.24D of the Judicature Act 1908). The existence of a judicial review cause of action with its special procedural requirements will retard the speedy and inexpensive determination of what is essentially a contractual dispute between the parties.Accordingly, I strike out this cause of action from the Commercial List proceedings but without prejudice to the right of the plaintiff to bring separate judicial review proceedings should its Commercial List proceedingsfail. Most of what would be achieved by the plaintiff under judicialreview seems achievable under the existing causes of action.Similar views were expressed in relation to judicial review proceedings through the1990s.87 Auckland Electric Power Board v Electricity Corporation of New Zealand Ltd [1993] 3 NZLR 53 at 61.8 WEL Energy Group Ltd v Bethune HC Auckland CL 50/95, 31 January 1996; and Clear Communications Ltd v Commerce Commission (1996) 9 PRNZ 678 (HC) at 679.[20] Since these authorities there have been some practical changes to the way in which the High Court lists are operated. There is now a full case management system for ordinary proceedings, involving case management conferences.9 Also,judicial review proceedings are now listed in Duty Judge lists in the High Court sothat they can be dealt with quickly and on a weekly basis.[21] Nevertheless, it is still difficult today to see why an application for judicialreview, with its special procedural requirements, will be better served in thecommercial list. The Duty Judge list where civil matters are called three times aweek, rather than once a week as on the commercial list, has greater flexibility.Where, as here, the complaints have a public law genesis, the issues to be determinedhave no particular commercial flavour.[22] Therefore, in my view where a proceeding is primarily concerned withjudicial review it is best treated that way and not filed in the commercial list. Iaccept that this could be seen as inconsistent with the statement of the Court ofAppeal in Securities Commission v Midavia Rail Investments in relation to "theunderlying transaction", where it was said:10In substance, the Commission is submitting that, if its allegations are proven,then the conduct is to be categorised as insider trading, which is, so it is said,infrequent, and therefore the proceeding does not relate to or arise out ofordinary transactions of persons engaged in commerce. But what must belooked at is the nature of the underlying transaction. In the present case, theimpugned share trades are, on their face, entirely ordinary transactions bypersons in commerce. Whether they amount to insider trading remains to beproved: that is the issue in the proceeding. One cannot at this stage assumethat the Commission will be able to substantiate its allegation and on thatassumption rule the proceeding ineligible for entry.[23] However, that was not a judicial review proceeding. Furthermore, the allegedinsider trading, while not ordinary, took place within the context of the trading ofshares of a publicly listed company, which undoubtedly had a commercial flavour.While in this case the 2008 agreement is, I accept, the underlying transaction, thatunderlying transaction from the point of view of the parties has been supplanted byan act of government which is now being challenged. This case is all about that9 High Court Rules, pt 7. Specifically, see rr 7.1–7.2.10 Securities Commission v Midavia Rail Investments, above n 2, at [31].government act. The sole reference to breach of contract in itself turns on an aspect of that governmental intervention. From a judicial review perspective, the issues are not commercial, but rather whether as pleaded there has been unreasonable andirrational government action, and an expropriation of PPL's contractual rights andgoodwill. The underlying public law nature of the dispute is demonstrated by the reliance on the Magna Carta, and the Universal Declaration of Human Rights.[24] Thus, in this case the underlying transaction has been effectively supersededby government action that is now the subject of challenge. The case does not in myview therefore have the requisite commercial flavour.[25] Therefore in the absence of any other relevant factors, I would grant thisapplication and remove this proceeding from the commercial list.Should this proceeding be in Auckland or Wellington?[26] The High Court Rules contain a specific provision relating to the filing of causes of action. Rule 5.1(1)(c) provides:5.1 Identification of proper registry(1) The proper registry of the court, for the purposes of rules 5.25 and 19.7, is,—(a) when a sole defendant is resident or has a principal place of business in New Zealand, the registry of the court nearest to the residence or principal place of business of the defendant, but when there are 2 or more defendants, the proper registry is determined by reference to the first-named defendant who is resident or has a principal place of business in New Zealand:(c) when the Crown is a defendant, the registry nearest to the place where the cause of action or a material part of it arose:[27] However, r 5.1(1)(c) must be read with ss 10(1) and (2)(g) of the JudicatureAmendment Act 1972 pertaining to judicial review proceedings. Sections 10(1) and(2)(g) provide:10 Powers of Judge to call conference and give directions(1) For the purpose of ensuring that any application or intended application for review may be determined in a convenient and expeditious manner, and that all matters in dispute may be effectively and completely determined, a Judge may at any time, either on the application of any party or intended party or without any such application, and on such terms as he thinks fit, direct the holding of a conference of parties or intended parties or their counsel presided over by a Judge.(2) At any such conference the Judge presiding may—(g) Fix a time and place for the hearing of the application for review.(emphasis added)[28] The approach to these two sections is now well settled.11 The effect ofs 10(2)(g) is to permit the Court to take a somewhat broader approach to the issue ofvenue than that historically made in respect of inter-party disputes pursuant to theother jurisdictions of the Court. However, r 5.1 remains a guide.[29] Here the defendant's principal place of business is Wellington, and a materialpart of the cause of action arose in Wellington.[30] I do not propose traversing the authorities on the meaning of "part of thecause of action". These have been considered elsewhere.12 I respectfully adopt theobservations of McGechan J in National Bank of New Zealand Ltd v Glennie:13A cause of action is an assembly of facts which entitles a plaintiff to relief(including discretionary relief). The meaning of "part" of a cause of actionis self-evident accordingly. However, the mere circumstance of being "part"of a cause of action will not suffice in itself. The policy in r 107 is to exclude merely trivial parts, conferring rights only where the part cause ofaction concerned is "material". The distinction is one of degree, looking torelative significance in the context of the particular claim. In a r 107 context, the assessment is to be made on the basis of the statement of claim, as filed. One looks to the allegations, in so far as components of the cause ofaction, as so made, to determine such "materiality".11 For a discussion see K v Chief Executive of the Department of Labour of Wellington (2009)19 PRNZ 222 (HC) at [3]–[10].12 At [3]–[10].13 National Bank of New Zealand Ltd v Glennie (1992) 6 PRNZ 292 (HC) at 294.I accept the often quoted statement of Quilliam J in Colman v Attorney-General14 ina similar context of "material" being "pertinent, germane or essential to".[31] The authorities relating to venue, where a cause of action is based on judicial review or administrative act were reviewed in K v Chief Executive of the Departmentof Labour of Wellington.15 It was noted there in relation to two causes of actionrelating to matters in Auckland that:16In judicial review the focus is on the procedures of the decision-maker and the lawfulness of the decision itself. Here the causes of action do not focus on the lead-up procedures, but rather on the lawfulness of the Minister'sdecision. Indeed, the procedures leading up to that decision are not criticised, and there is no criticism of any step taken in Auckland. Therefore, no step or circumstance in Auckland will be of key pertinence in considering the first two causes of action. If there were only the two causes of action, it would be difficult to say that a material part of them arose in Auckland, although it is not necessary for me to express a firm conclusion on this point.(emphasis added)[32] However, elements of a third cause of action that did involve a detailedconsideration of circumstances that arose in Auckland qualified as a "material part"arising in that centre. It is clear that the making of an administrative decision inWellington is not determinative of where the application for review must be heard.When a finding of fairness or lawfulness in judicial review involves an evaluation ofa significant issue of fact which arises in a certain registry area, a material part ofthat cause of action can be said to arise in that area.17[33] In Criminal Bar Association of New Zealand Inc v Attorney-General it was observed that there was no basis for finding that a material part of the cause of actionarose " at every place where any of the decisions challenged may have practicaleffect or application".18 The fact that a decision may affect people in all parts ofNew Zealand does not qualify all centres as places where a material part of the causeof action arose.14 Colman v Attorney-General (1978) 3 PRNZ 577 (SC).15 K v Chief Executive of the Department of Labour of Wellington, above n 11, at [20]–[21].16 At [22].17 At [24].18 Criminal Bar Association of New Zealand Inc v Attorney-General [2012] NZHC 400, (2012) 21 PRNZ 221.[34] In this case, none of the causes of action focus on any of the administrative procedures or acts in Auckland. However, it was argued here by Mr Simpson thatwhile the impugned administrative decision was made in Wellington, PPL's judicialreview causes of action arose in Auckland because the NZTA office that sent thetermination notice was based in Palmerston North and not Wellington, and sent toAuckland. That may be so, but these are not factors of key pertinence to the claim.He also argued that PPL's business, which is based in Auckland, would be in effectexpropriated and destroyed by the NZTA action. He also notes that becausecompensation would be payable to PPL in Auckland, the financial affairs andbusiness activities of PPL were planned in Auckland, and any legitimate expectationon PPL's part arose in Auckland, Auckland was a suitable venue.[35] While PPL's business is based indeed in Auckland, it is a New Zealand-widebusiness, with personalised plates being distributed throughout the country. In mostcases a plaintiff will be based in a particular centre, and therefore its personal losswill be focused on that centre. However, more is required before it can be concludedthat a material part of the cause of action arose in that centre. There must be a stepor circumstance in the causes of action that arose in Auckland of key pertinence, andI am unable to see one. The loss of business will be New Zealand-wide.[36] Thus, I am unable to see how a material part of the cause of action arose inAuckland. The case is to be distinguished from the third cause of action in K v ChiefExecutive of the Department of Labour of Wellington where particular events thattook place in Auckland would be the subject of close scrutiny by the Court andrelevant to proving a cause of action. Similarly the case of Auckland Harbour Boardv Belgrave19 relied on by Mr Simpson, where a boat that was the subject matter ofthe claim was imported into Auckland, is distinguishable. Events essential to theclaim took place in that centre.The Court's discretion[37] I have concluded that this proceeding should not have been filed on thecommercial list, and also that it should not in any event have been filed in Auckland.19 Auckland Harbour Board v Belgrave HC Auckland CP 423/87, 14 August 1987.[38] The Court has a general discretion under s 10(2)(g) to fix the time and placefor the hearing of an application for review. Moreover, under r 5.1(5):5.1 Identification of proper registry(5) If it appears to a Judge, on application made, that a different registry of the court would be more convenient to the parties, he or she may direct that the statement of claim or all documents be transferred to that registry and that registry becomes the proper registry.[39] Further, the power under r 5.1(4) to direct a statement of claim to betransferred if that claim has been filed in the wrong registry is again a discretionarypower. The word used is "may". Finally, I note that under r 29.13 which providesfor removal from the commercial list, the power is again expressed in discretionaryterms.[40] There can be no doubt therefore that notwithstanding finding as I do that thisproceeding should not have been filed on the commercial list, or in Auckland, Inevertheless retain a general discretion as to whether I transfer the proceeding or not.[41] The case at present has a fixture in Auckland on 18 November 2013 for four days. The issues that arise are urgent. The plaintiff is seeking, amongst other things,permanent injunctive relief. It seems plain that the release of a judgmentdetermining issues prior to 31 March 2014 is desirable, avoiding as it will a possibleapplication for an interim injunction. An early decision will resolve uncertainty andthe prospect of goodwill being damaged, and hopefully enable the parties to moveforward.[42] I have made inquiries of the List Judge in Wellington. Unfortunately there is no four day fixture available this year at that registry. If I transfer the proceedings toWellington this would certainly cause delay, and is likely to add to expense andinconvenience. I note that in other respects matters of convenience are equallybalanced, with the parties' lawyers being based in Auckland and Wellingtonrespectively. It is unlikely that there will be witnesses called for cross-examination.[43] I have therefore decided in my discretion that although the defendant hassucceeded in its substantive arguments, I will nevertheless refuse its application totransfer the proceedings to Wellington. To do this will promote the objective of theHigh Court Rules, which is to secure the just, speedy and inexpensive determinationof any proceeding. That result is somewhat unjust to the defendant, but I considerthe need for a speedy hearing to outweigh that injustice. I will also leave theproceeding on the commercial list, as commercial list Judges are now familiar withit.[44] However, the proceedings should not have been filed either in thecommercial list or in Auckland. They should have been filed in the Wellingtonregistry and dealt with as a judicial review application in that city. Therefore, Ipropose ordering costs on this application in favour of the defendant.[45] I have considered whether I should order costs beyond the scale to signify theCourt's strong disapproval of proceedings being filed in the wrong registry. If theyhad been filed in the right registry it is likely that an urgent fixture could haveproceeded in Wellington this year. A fixture would have been allocated some monthsago.[46] I have decided in this instance not to take that further step as I do not think that the filing was carried out in a deliberate or cynical attempt to sidestep the rules.Result[47] The application is dismissed and the fixture for 18 November 2013 (fourdays) at Auckland confirmed.[48] The defendant, although ultimately unsuccessful, is entitled to costs whichare to be paid by the plaintiff and calculated on a 2B basis...Asher J