STAN SEMENOFF LOGGING LTD v NEW ZEALAND TRANSPORT AGENCY [2020] NZHC 40

STAN SEMENOFF LOGGING LTD v NEW ZEALAND TRANSPORT AGENCY [2020] NZHC 40IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-1427[2020] NZHC 40UNDER the Road User Charges Act 2012IN THE MATTER of an appeal pursuant to s 70 of the RoadUser Charges Act 2012 against a decision ofthe District CourtBETWEEN STAN SEMENOFF LOGGING LIMITEDAppellantAND NEW ZEALAND TRANSPORT AGENCYRespondentHearing: 10 December 2019Appearances: D J Neutze for the AppellantR McCoubrey and B Thompson for the RespondentJudgment: 30 January 2020JUDGMENT OF GORDON JThis judgment was delivered by meon 30 January 2020 at 4 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors: Brookfields Lawyers, AucklandMeredith Connell, AucklandIntroduction[1] The appellant, Stan Semenoff Logging Ltd (SSL), appeals on questions of law,pursuant to s 70 of the Road User Charges Act 2012 (the Act), against a decision of aDistrict Court Judge in relation to road user charges (RUC). SSL had been assessedby the respondent, the New Zealand Transport Agency (NZTA), as owing additionalRUC of $532,878.96 for the period from July 2016 to April 2017 (the RUCAssessment).Factual background[2] SSL operates a fleet of logging vehicle combinations which mainly carry felledtrees from forest locations in Northland to the port at Whangarei. Each vehiclecombination is made up of a truck and trailer. At the relevant times, SSL's fleetconsisted of at least 68 such combinations. All of SSL's vehicles consisted of acombination of a type-14 truck (powered vehicle with four axles) and a type-43 trailer(unpowered vehicle with four axles). The vehicle combination and axles are relevantto the RUC rates payable and the maximum weight carriable.[3] The NZTA is the RUC collector under the Act.1 Under s 53(1), it is empoweredto issue binding assessments of unpaid RUC if it forms the opinion that the owner oroperator of a RUC vehicle is liable for any unpaid RUC.[4] The NZTA analysed records for around 17,200 loads carried by SSL's vehiclesover a 10-month period. SSL's vehicles were travelling above their maximumallowable weight on approximately 68 per cent of the trips (that is, around 11,690trips) for which records were provided.2[5] Accordingly, the NZTA issued an assessment for unpaid RUC of $532,878.96for that 10-month period. SSL sought an independent review of the assessmentpursuant to s 55 of the Act. The RUC Assessment was not disturbed on review.SSL then appealed to the District Court under s 68 of the Act. The task of the District1 Road User Charges Act 2012, s 5.2 This includes where SSL was operating over the allowable weight but within the margin oftolerance applied by the NZTA in its discretion discussed below at [71].Court Judge on such an appeal is to determine whether the notice issued by the RUCcollector is "appropriate". SSL's appeal was dismissed.3 SSL now appeals againstthe decision of the District Court Judge, pursuant to s 70, on the basis that it was wrongin law.District Court decision[6] In his decision of 17 June 2019, Judge Harrison, in dismissing SSL's appealchallenging the RUC Assessment, said:4[3] In his affidavit of 29 April 2019, Mr Daron Turner, the GeneralManager of SSL, accepts that additional Road User Charges (RUC) arepayable by SSL in the sum of $135,365.14.[4] The basic issue between the parties is, what is the proper basis ofassessment.[27] The fundamental submission of SSL was that s 3(a) of the Act dictatedthat additional RUC should only have to be paid in respect of the actual tripsthat were overweight.[28] Section 3(a) provides:The purpose of this Act is to—(a) Continue the road user charges system by imposing chargeson RUC vehicles for the use of the roads that are in proportionto the costs that the vehicles generate.[29] Mr Neutze for the appellant [SSL] submitted that the methodologyadopted by the agency is totally arbitrary and bears no relation to the actualdistance travelled overweight. He submitted that it is based on the period ofthe licence which the operator happens to have purchased and bears no orinsufficient relationship to the cost which an operator's vehicles generate onthe respondent's roading network.[34] I accept the submission of Mr McCoubrey that it is appropriate for theagency to assess SSL's unpaid RUC by comparing what a compliant operatorwould have paid in the same circumstances. He further submitted that it wouldnot be fair if SSL was to be treated differently from other operators.[35] It seems to be illogical and inappropriate for SSL to submit that itis appropriate for it to acquire licences for lesser weights than are carried onindividual trips and then to maintain that all that is required to meet their3 Stan Semenoff Logging Ltd v New Zealand Transport Agency [2019] NZDC 11168.4 Stan Semenoff Logging Ltd v New Zealand Transport Agency (DC), above n 3.obligations under the statute is to pay the difference between the weightpermitted by the licence obtained and the actual weight. 11,690 instances ofoperating at an excessive weight is a clear indication of the inappropriatenessof the method of calculation advanced on behalf of SSL.[39] For these reasons, the appeal is dismissed.Statutory backgroundOverview of the RUC regime[7] By way of overview,5 heavy vehicles (over 3,500 kg) and those powered byfuel which is not taxed at source are required to pay RUC.6 The purpose of RUC is toprovide revenue to fund the costs of New Zealand's land transport system, includingthe building and maintenance of roads and other infrastructure. The owner or operatorof a RUC vehicle pays RUC by purchasing a distance licence (available in units of1,000 km) for their vehicle based on the RUC vehicle's weight and type. The amountof RUC payable is higher for heavier vehicles as they do more damage to roads, andinfrastructure such as bridges must be built to a higher standard to accommodate them.The old RUC regime[8] An independent review undertaken by the Road User Charges Review Groupin 2009 concluded that the previous RUC regime was complex and prone to evasion.7Under the old Road User Charges Act 1977, RUC were imposed in proportion to thecosts generated by particular types of vehicles. But under that Act, the RUC systemwas based on an operator nominating the actual weight they would carry. Accordingly,as the Review Group found, the system was prone to weight-based evasion wherebyRUC licences were purchased for a lesser weight than that actually carried.8[9] Assessing and recovering the unpaid amount was also cumbersome under theold RUC regime. As the Review Group noted, recovery of unpaid RUC was achievedby voluntary agreement or by placing evidence before a District Court Judge for a5 See Freight Lines Ltd v New Zealand Transport Agency [2015] NZDC 20601 at [6]–[20].6 Road User Charges Act 2012, s 5 (definition of "RUC vehicle").7 James Hill, Tony Gibson and Warren Young An Independent Review of the New Zealand RoadUser Charging System (Road User Charges Review Group, 31 March 2009).8 At 59.formal assessment of debt.9 That process of assessing unpaid RUC was costly andcould sometimes take several years to reach a conclusion.10 As a result, only largesums of unpaid RUC could economically be recovered, meaning operators couldexpect little to be done other than in extreme cases, thus disincentivising compliance.The current RUC regime[10] Against that background, the Road User Charges Act 2012, sets out its purposein s 3 as being to:(a) continue the road user charges system by imposing charges on RUCvehicles for their use of the roads that are in proportion to the coststhat the vehicles generate:(b) modernise and simplify the road user charges system:(c) improve compliance with, and the recovery of, road user charges:(d) establish a framework for the electronic management of road usercharges.[11] Section 7 sets out the core obligation to pay RUC, which are defined in s 5 ascharges payable under the Act in respect of distance travelled by a RUC vehicle on aroad. "Road" is defined in s 5 to include a highway and a street. It was commonground between the parties that the definition does not include travel on a private roadsuch as in a forest.[12] The detail of the duty to pay RUC is set out in s 9, subs (1) of which providesthat a person must not operate a RUC vehicle on a road unless a distance licence hasbeen issued for that vehicle. The licence must also specify the RUC vehicle type,which is defined in s 5. In short, no person may operate a RUC vehicle without payingthe RUC that are due in respect of that vehicle.[13] The "RUC vehicle type" is defined as the type prescribed by regulations madeunder s 89. That section provides that regulations may be made prescribing RUCvehicle types for the purposes of the Act and bands of RUC weight for each RUC9 At 60.10 At 60.vehicle type. Regulations were issued by Order in Council on 11 June 2012 as theRoad User Charges Regulations 2012 (the RUC Regulations).[14] RUC vehicle types describe the truck, trailer or other vehicle in question. TheRUC Regulations also specify weight bands, which form part of the RUC vehicle type.The "RUC weight" is defined in s 5 of the Act. That definition makes reference to theVDAM Rule 2002. The current VDAM Rule is the Land Transport Rule: VehicleDimensions and Mass 2016 (VDAM Rule 2016), which replaced the VDAM Rule2002 from 1 February 2017.11[15] The RUC Assessment issued by the NZTA in this case includes distancelicences both before and after 1 February 2017, so both versions of the VDAM Ruleare relevant. Under the VDAM Rule 2002, the maximum weight for an eight-axlevehicle combination (as is the case with all of SSL's vehicles) was 44 tonnes;12 underthe VDAM Rule 2016, this increased to 46 tonnes.13[16] In summary:(a) Every RUC vehicle must pay RUC by purchasing a distance licence.(b) Every distance licence has a maximum weight that it covers. The costof a licence varies depending on the weight of the vehicle and its axleconfiguration. The rates are set out in the Road User Charges (Rates)Regulations 2015. The evidence of Bryan Talbot, senior technicaladvisor at the NZTA, is that RUC rates are calculated using a costallocation model which is designed to charge road users according tothe cost they impose on the roading system.(c) To operate above the maximum weight provided by the licence, theowner or operator must purchase an additional licence for the towingvehicle for each individual load that covers the additional weight11 References to the "VDAM Rule 2002" in the Act have not yet been updated to reflect this change.12 Land Transport Rule: Vehicle Dimensions and Mass Rule 2002, s 4.5(1) and sch 2, pt A, table 6.13 Land Transport Rule: Vehicle Dimensions and Mass Rule 2016, s 4.2(2)(a) and sch 2, pt 2,table 2.2. It was uncontested that SSL had distance licences allowing it to carry a maximum of44 tonnes before 1 February 2017 and 46 tonnes thereafter.carried under the permit14 or change the towing vehicle to a type-Hvehicle;15 and, in either case, pay the appropriate RUC for the vehicleto travel at the higher weight.[17] Under s 30 an operator may apply to the RUC collector for a refund of RUCfor off-road travel. Such applications can be made up to two years after the date ofissue of the licence for which the refund is sought.16[18] Turning next to other procedural aspects of the RUC regime, from 2012, theAct replaced the court-assessed procedure with a simpler one. That process is asfollows:(a) Under s 53, the RUC collector may issue an assessment if it forms theopinion that there are unpaid RUC for which the owner or operator isliable. The owner or operator of the RUC vehicle must then either paythe unpaid RUC specified in the assessment or apply to the RUCcollector for a review of the assessment under s 55.(b) Under s 55, (if a review is sought) the RUC collector must arrange foran appropriately qualified independent person to review theassessment, taking into account any evidence provided by the applicant.Under subs (1)(a), the grounds for review include where "theassessment is incorrect in a material particular". If, following thereview, the RUC collector confirms, reduces or cancels the assessmentof any unpaid RUC, the RUC collector must notify the applicant within10 working days.17(c) Under s 68, a person may appeal to the District Court against a noticeissued by the RUC collector confirming or reducing an assessment ofunpaid RUC. On appeal, the District Court must determine whether thenotice issued is "appropriate". That standard is broader than the14 Road User Charges Act 2012, s 12(2)(b).15 Section 12(2)(a).16 Section 35(2).17 Section 55(5)(a)."material particular" ground of review under s 55. Under s 69(2), theDistrict Court may confirm, reverse or modify the decision appealedagainst.(d) Under s 70, a party to an appeal under s 68 may further appeal to theHigh Court on a question of law.Approach to appeals on questions of law[19] Section 70 of the Act, relevantly provides:70 Appeal to High Court on question of law(1) A party to an appeal under section 68 who is dissatisfied with thedecision of the District Court on the ground that it is wrong in lawmay appeal to the High Court on that question of law.[20] The approach to be applied is set out in Bryson v Three Foot Six Ltd,18 laterconfirmed in Vodafone New Zealand Ltd v Telecom New Zealand Ltd.19 In short, thisCourt is not to substitute its own views for that of the lower court; instead, the Courtmust consider whether the decision under appeal reveals a misinterpretation ormisapplication of the statutory powers.[21] Unlike general appeals, appeals on questions of law do not usually allowargument based on factual error. However, as the Supreme Court has recognised, thereare rare occasions where "an ultimate conclusion of a fact finding body can sometimesbe so insupportable — so clearly untenable — as to amount to an error of law".20"Appropriate" — the task of the District Court Judge[22] I next refer to the task of the District Court Judge in this case. Under s 68 ofthe Act, the Judge must determine whether the notice issued by the RUC collectorfollowing a review of an assessment of unpaid RUC is "appropriate".18 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [24]–[27].19 Vodafone New Zealand Ltd v Telecom New Zealand Ltd [2011] NZSC 138, [2012] 3 NZLR 153 at[5]–[55].20 At [52], citing Edwards v Bairstow [1956] AC 14 (HL).[23] Mr McCoubrey, for the NZTA, referred the Court to a decision of Gendall J inRational Transport Society Inc v New Zealand Transport Agency, where the Courtconsidered the meaning of the word "appropriate", albeit in a different context.21 Thecase was concerned with s 32 of the Resource Management Act 1991 (RMA) whichrequired a consideration of whether the objectives of a proposal under the RMA werethe "most appropriate" way to achieve those objectives. Gendall J held:22I do not accept the submission by the appellant's counsel that the policy "mostappropriate" must be the superior method in terms of stream protection.Section 32 requires a value judgment as to what on balance, is the mostappropriate, when measured against the relevant objectives. "Appropriate"means suitable, and there is no need to place any gloss upon that word byincorporating that it be superior.[24] Mr Neutze, for SSL, agreed with Mr McCoubrey's submission that the word"suitable" could be substituted for the word "appropriate" in the context of the Act. Iaccept counsel's submissions that, in the context of the Act, appropriate meanssuitable.[25] Mr McCoubrey submits, and I accept, that the Act does not require the DistrictCourt Judge to determine that the notice (in other words, the methodology employedby the RUC collector to make its assessment) is the only appropriate or even the mostappropriate methodology — it must simply be appropriate.[26] Judge Harrison held that "it is appropriate for the [NZTA] to assess SSL'sunpaid RUC by comparing what a compliant operator would have paid", that is, byreference to the total distance of the licence purchased (the NZTA methodology).23Grounds of appeal[27] In its Notice of Appeal, SSL's grounds of appeal are stated as follows:2. The District Court judge erred as a matter of law in finding at [34] thatit is appropriate for the respondent [the NZTA] to assess theappellant's road user charges ("RUC") by comparing what acompliant operator would have paid in the circumstances and thendismissing the appeal at [39], for all or any of the following reasons:21 Rational Transport Society Inc v New Zealand Transport Agency [2012] NZRMA 298 (HC).22 At [45].23 Stan Semenoff Logging Ltd v New Zealand Transport Agency (DC), above n 3, at [34].(i) one of the principal purposes of the Act is s3(a) of the RUCAct is to "continue the road user charges system by imposingcharges on RUC vehicles for their use of the roads that are inproportion to the costs that the vehicles generate";(ii) the assessment methodology adopted by the respondent andaccepted as appropriate in the District Court Decision("Assessment Methodology") calculates unpaid RUC byreference to the total distance of the licence which happenedto be purchased by an operator ("licence period"), which isarbitrary as it bears no relation to the costs which theappellant's vehicles generated or to the actual distancetravelled by the appellant's vehicles overweight during thelicence period;(iii) the Assessment Methodology is inappropriate when therespondent is able to use all the information specified ins53(2) of the RUC Act and information was available to therespondent and the District Court in this case to calculateprecisely the distances travelled overweight during the licenceperiods;(iv) the Assessment Methodology does not take into account thedifficulties of logging truck operators identifying preciselythe weight of the loads in forests, as opposed to when they areweighed at the point of destination;(v) there was no evidence that any operators in the loggingtransport industry are in fact compliant;(vi) a notional compliant operator could have purchased licencesfor 1,000 kilometres and this relevant fact was not taken intoaccount in the District Court decision;(vii) there was no evidence that the appellant was in fact able toobtain "type H" permits for the routes travelled by theappellant's logging trucks, which the respondent alleged theappellant should have purchased to be compliant; and(viii) the Assessment Methodology is inappropriate as it involved amisconstruction of the RUC Act which maximised a return forthe respondent more than was justified by the appellant'sactual road use when overweight, resulting in adisproportionate outcome which is inconsistent with theobjectives of the Act.[28] In ground 3 of the Notice of Appeal, SSL states that the assessmentmethodology and the Judge's decision placed excessive emphasis on compliance whenthere are other means of achieving compliance.[29] Ground 4 of the Notice of Appeal largely repeats ground 2(i).[30] Finally, ground 5 states:5. The Assessment methodology does not make the necessary deductionfor distance travelled off the roading network administered by therespondent ("off-road travel"), which is required as the off-road traveldoes not generate any cost to the respondent [31] The crux of the appeal grounds is that Judge Harrison was wrong in law inholding that the assessment methodology was appropriate when the methodologyplaces excessive emphasis on the purpose of compliance and comparison with anotional compliant operator. Rather, SSL says, the primary purpose of an assessmentfor unpaid RUC should be to ensure that those charges bear a sufficient relationship tothe cost which an operator's vehicles generate on the NZTA roading network, pursuantto the purpose of proportionality under s 3(a) of the Act. Accordingly, SSL submitsthat the Judge was wrong in law not to "have accepted, or at least considered, SSL'salternative calculation [which assesses unpaid RUC based on the actual distance it tellsthe NZTA the relevant vehicle travelled overweight on any particular journey (the SSLmethodology)] rather than totally disregarding it".[32] The essence of NZTA's response is that the Act requires operators to have thecorrect licence at all times, for every load carried during the term of that licence. Ifthe operator is travelling over the maximum weight permitted under the licence, theyare liable for the RUC that would have been payable had they purchased the correctlicence required to be compliant. The assessment methodology employed by NZTAwas simply to determine what a compliant operator would pay and then assess asunpaid RUC the difference between that amount and the lesser (non-compliant)amount paid by SSL. This approach was appropriate and there was no error of law bythe District Court Judge in upholding it.Preliminary matter: further evidenceThe proposed evidence[33] Before turning to the substantive grounds of appeal, I first address thepreliminary issue of SSL's application for leave to adduce further evidence, namely afurther affidavit of Daron Turner, the General Manager of SSL, sworn 19 November2019. The proposed affidavit contains evidence as to:(a) the unavailability of type-H permits (which would allow SSL to traveloverweight) on certain routes on which SSL's logging trucks travel, aswell as the impracticality of SSL obtaining additional licences; and(b) weighbridge data for other logging operators that Mr Turner says heobtained from Northport (the destination of most of SSL's loggingtrucks) for the month of July 2019 and the week of 26 August 2019.[34] The NZTA opposes the application for leave. It also applies for leave to adducefurther evidence, namely a further affidavit of Patrick Aldridge, principal advisor atthe NZTA, sworn 28 November 2019. That affidavit contains evidence:(a) refuting the claims made in Mr Turner's proposed further affidavit; and(b) responding to SSL's claim that the SSL methodology is based on dataand documentation which the NZTA has, or can obtain under the Act,including GPS data used for the purposes of assessing refunds for off-road travel by a RUC vehicle.Further evidence on appeals on questions of law[35] The introduction of further evidence on appeal is governed by r 20.16 of theHigh Court Rules 2016, which provides in relevant part:(3) The court may grant leave only if there are special reasons for hearingthe evidence. An example of a special reason is that the evidencerelates to matters that have arisen after the date of the decisionappealed against and that are or may be relevant to the determinationof the appeal.(4) Further evidence under this rule must be given by affidavit, unless thecourt otherwise directs.[36] The traditional view is that where the appeal is on a question of law only, thereis no power under this rule to admit further evidence.24 However, the Court may24 Schier v Removal Review Authority [1999] 1 NZLR 703 (CA).exercise its inherent jurisdiction to receive further evidence in exceptional cases.25The position regarding admission of further evidence on appeals on questions of lawis summarised in CH & DL Properties Ltd v Christchurch District Licensing Agency:26[13] There is no doubt that r 20.16 allows the possibility of evidence beingadduced in respect of appeals on a point of law. This has been done in twocases: Terrace Tower (New Zealand) Pty Ltd v Queenstown Lakes DistrictCouncil and in Legal Services Agency v McDonald-Wright [33] [However,] [t]he two decisions of Terrace Tower and McDonald-Wright are instances merely where the Court has allowed in contextualbackground to assist it understanding the decision that has been made, not asa means of challenging that decision.[34] For that reason I am of the view that there have to be very specialreasons why any evidence would be allowed on an appeal on a question oflaw. I do not see r 20.16 as attempting to displace the reasoning of the Courtof Appeal in Schier. Rather, to the contrary, it simply recognises the presenceof the inherent jurisdiction of the Court to admit evidence in appeals limitedto errors of law in very special circumstances.[37] The Court in the above case used the language of "very special reasons" and"very special circumstances". That illustrates the Court's need to exercise caution, asnoted by the Court of Appeal in Telecom Corp of New Zealand Ltd v CommerceCommission:27 the Court must be alert against the danger of allowing what the legislatureintends to be a genuine appeal against a decision of an expert body to beconverted into a new trial, the prior proceedings being but a prelude Thisconsideration must weigh strongly against the allowance of any evidencewhich is little more than an improvement on, or a revised version of, materialthat was before the [decision maker whose decision is being appealed].[38] Finally on this point, the fact that new evidence demonstrates factual error inthe court below does not constitute special reason to admit it in an appeal limited to aquestion of law.28 That is so even where the "new evidence being proposed is highlyrelevant" and "may well have made a difference had it been before" the lower court.2925 See, for example, Terrace Tower (NZ) Pty Ltd v Queenstown Lakes District Council [2001]2 NZLR 388 (HC); and Legal Services Agency v McDonald-Wright HC WellingtonCIV-2009-404-6356, 16 February 2010.26 CH & DL Properties Ltd v Christchurch District Licensing Agency (2010) 20 PRNZ 680 (HC).27 Telecom Corp of New Zealand Ltd v Commerce Commission [1991] 2 NZLR 557 (CA) at 558.28 Chamberlain v Scott [2012] NZHC 2596. See also McGechan on Procedure (online looseleaf ed,Thomson Reuters) at [HR20.16.03].29 Chamberlain v Scott, above n 28, at [23].DiscussionSSL's further evidence[39] Dealing first with SSL's proposed evidence: Mr Neutze submits that there arespecial reasons for introducing the evidence. First, he says the evidence disproves thealleged assumption underlying the NZTA methodology, namely that SSL could haveand should have purchased type-H permits (H81 and H82) for routes on which itsvehicles travelled. Mr Turner deposes that he applied for H81 and H82 permitsfollowing the District Court hearing, but his application was declined by the NZTA.He deposes that SSL has been advised that it cannot obtain H81 and H82 permits forcertain Council roads on which its vehicles travel.[40] In my view, however, there is no such assumption underlying the NZTAmethodology (or the decision of the District Court Judge). That methodology simplycalculates unpaid RUC by reference to the amount of RUC an operator (such as SSL)would have to pay in order to comply with its obligations under the Act (that is, not tobe overloaded). That obligation is the same for all operators of RUC vehiclesregardless of what route they travel on. In order to operate legally above the maximumweights provided for in the VDAM Rule, all operators are required to obtain therelevant permit allowing them to travel at a higher weight and pay the appropriateRUC by purchasing either an additional licence or a type-H distance licence.30 Thatis not an underlying assumption, it is simply how the RUC regime works.[41] To the extent that SSL is unable to obtain an additional or type-H distancelicence on particular routes that it travels, Mr McCoubrey submits that this is becausecertain bridges on those routes are not rated to withstand the damage caused by suchvehicles when operating over the default maximum weight. If SSL knew that permitswere not available for certain routes, then it ought to have ensured that it operatedbelow the maximum allowable weight on those routes.3130 Road User Charges Act 2012, s 12.31 SSL would have to change its fleet from four axle trailer to five axle trailers. As explained in theaffidavit of Mr Talbot, senior technical advisor at the NZTA, nine axle combinations are eligiblefor 50MAX permits as they spread their weight more evenly across the road, thus reducing thedamage caused compared to an eight axle combination. However, I note that my decision doesnot turn on the availability, or otherwise, of 50MAX permits.[42] I accept Mr McCoubrey's submission that whether an operator is actually ableto obtain a permit for a particular vehicle combination to travel overweight on aparticular route is a separate issue from what they are required to do in order to complywith the law. This is not a situation where SSL was unable to comply with itsobligations under the Act because it was unable to obtain permits to travel overweighton certain routes. If such permits were not available then SSL simply needed to ensureit operated its vehicles below the default maximum under the relevant VDAM rule.[43] In any event, SSL does not dispute that it is appropriate to use the RUC ratesof the type-H distance licence when calculating unpaid RUC. For those reasons,Mr Turner's proposed further affidavit, at least in relation to this part of it, is irrelevantto an issue on appeal, and leave is not granted on this basis.[44] Secondly, Mr Turner's further affidavit refers to similar non-compliance ofother operators in the logging industry. Mr Neutze submits that this addresses thealleged assumption that, in his words, "SSL is significantly different from otheroperators in similar circumstances to it".[45] Again, however, I do not accept that there is any such assumption underlyingthe NZTA methodology (or the decision of the District Court Judge). The duty set outin the Act is clear: operators of RUC vehicles must purchase the correct distancelicence for the weight that they carry. The duty is not conditional on the complianceof others in similar situations. The non-compliance of others does not justify SSL'snon-compliance. That evidence is therefore irrelevant.[46] I also note Mr McCoubrey's objections to admission of that evidence on thebasis that it is unreliable and that it relates to a different time period from theassessment period in this case. As to reliability, Mr Turner says he obtained the datafrom Northport, presumably in the form of business records. However, Mr Turneraccepts that he has altered the evidence by removing SSL vehicles and vehicles whichwere operating on 50MAX permits. Mr McCoubrey submits that it is not clearwhether Mr Turner has made other changes to the data, and therefore the evidence isunreliable. As to the different time period, Mr McCoubrey submits that the proposedevidence does not assist in determining levels of compliance during the assessmentperiod. I simply note those objections. In the end, the reliability of the evidence andthe date range are secondary matters as the evidence is not, in my view, relevant in thefirst place.[47] Accordingly, I decline leave for SSL to adduce further evidence on appeal.There are no special reasons for the admission of the evidence, let alone any veryspecial reasons.The NZTA's further evidence[48] Next, I turn to the NZTA's application to adduce further evidence. As I havedeclined leave for SSL to adduce Mr Turner's further evidence, there is no need toconsider the NZTA's application to adduce Mr Aldridge's further affidavit in reply toMr Turner's proposed further affidavit. However, the NZTA seeks leave to adducecertain paragraphs from Mr Aldridge's further affidavit irrespective of whether leaveis granted to adduce Mr Turner's further evidence. Those paragraphs address the issueof the reliability of GPS data, which was raised for the first time in this proceeding.[49] SSL's alternative methodology proposes the use of GPS data for (it says) amore accurate and proportionate assessment of unpaid RUC for the actual distancetravelled overweight. Mr McCoubrey submits that Mr Aldridge's further affidavit isrelevant in refuting such use of GPS data, noting that Mr Turner previously advisedthe NZTA, in the context of other proceedings,32 that GPS data from its vehicles areunreliable.[50] However, at the hearing, Mr Neutze clarified that SSL's acknowledgement ofthe unreliability of its vehicles' GPS data was in relation to the recording of speeds,not in relation to recording distances (which is the relevant data for assessing unpaidRUC). He further noted that the NZTA already uses GPS data in assessing refunds foroff-road travel. The paragraphs in Mr Aldridge's evidence are therefore answered.But more particularly, as will be apparent from my consideration of the substantiveappeal, the availability of GPS data to support SSL's assessment methodology is32 Stan Semenoff Logging Ltd v New Zealand Transport Agency [2019] NZHC 541; and StanSemenoff Logging Ltd v New Zealand Transport Agency [2019] NZHC 1133.irrelevant in determining whether the Judge made an error of law when he determinedthe NZTA methodology was appropriate.[51] Accordingly, I also decline leave for the NZTA to adduce further evidence.Substantive appealDid the Judge misapply the purpose of the Act?[52] I consider the first three appeal grounds, 2(i), (ii) and (iii), together, along withground 4 which largely repeats ground 2(i). As I have already noted, the crux of SSL'sgrounds of appeal is that the NZTA methodology emphasises the compliance purposerather than the proportionality purpose, which SSL submits should be the principalpurpose in assessing unpaid RUC. Appeal grounds 2(i), (ii) and (iii) all relate to thesubmission that the District Court Judge was wrong in law to emphasise the purposeof compliance over that of proportionality.The proportionality purpose: s 3(a)[53] One of the purposes of the Act is to impose charges on RUC vehicles for theiruse of the roads that are in proportion to the costs that the vehicles generate.33However, the NZTA methodology calculates unpaid RUC by reference to the totaldistance of the licence purchased by the operators rather than the actual distancetravelled overweight. SSL says this is arbitrary and bears no relation to the costs whichthe non-compliant operator's vehicles generate.34[54] In reply, Mr McCoubrey submits that this is as much an attack on the RUCregime as it is on the NZTA's assessment methodology. He says that the NZTAmethodology simply assesses what a compliant operator would have to pay, and thendetermines as unpaid RUC the difference between that amount and the lesser amountthat the non-compliant operator (here, SSL) actually paid.33 Appeal ground 2(i).34 Appeal ground 2(ii).[55] This very issue was previously considered by Judge Sharp in the District Courtin Freight Lines Ltd v New Zealand Transport Agency.35 It appears that case is theonly other case under the Act which has considered this issue. There, Judge Sharpcommented:[40] The issue [is] can unpaid RUC be assessed over the entire lengthof the relevant RUC licence? [42] [T]he starting point is that an assessment, whether by the NZTA,the independent Reviewer, or this Court, is an assessment of the road usercharges that ought to have been paid to the Crown. The RUC Act requirestransport operators to ensure that the relevant distance licence exceeds thegross weight at all times. [43] "Given that a licence must cover every journey undertaken underit, an operator has to buy a licence to cover the heaviest load it will carry underthe licence." [44] If an operator has to buy a licence to cover the heaviest load it willcarry under the licence, surely it follows, as night must follow day, that theentire licence that should have been purchased has to be assessed for RUC.[45] [G]iven that [the non-compliant operator] should have bought alicence which covered that particular journey carrying an overweight load,right from the start it should have bought the more expensive licence, even ifit had to be permitted in order to do so.[45] I agree with the [NZTA]. The [non-compliant operators] are liable topay the difference between the licence that they did buy and what they shouldhave bought in the beginning in order to be compliant for that one journey forwhich they were later penalised. Here, the [NZTA] applied the rate that shouldhave been paid to the licence that was bought, deducted what was actuallypaid and assessed the operator for the difference. (emphasis in original)[56] Judge Harrison, in the decision on appeal, considered Freight Lines andfollowed the approach of Judge Sharp set out above.36[57] Mr Neutze submits that Freight Lines is distinguishable as one of the operatorsin that case was a livestock transporter, who, unlike logging operators, would not, atany stage, have accurate information about the weights carried on each trip. This isbecause no weight is recorded as part of the service as livestock customers are charged35 Freight Lines Ltd v New Zealand Transport Agency, above n 5.36 Stan Semenoff Logging Ltd v New Zealand Transport Agency (DC), above n 3, at [30]–[31].per head of animal carted. By contrast, such data is in fact available in the presentcase. So, Mr Neutze says, it is not necessary to assess the unpaid RUC over the lengthof the entire licence — the actual distance travelled overweight can be calculated.37[58] I do not accept that submission for two reasons:(a) First, it is an undesirable state of affairs for operators in the livestockindustry to be treated more strictly than logging operators, who weighevery load carried and are therefore in a better position not to overload.In this case SSL knew that its vehicles were frequently operating abovetheir allowable weight as they received dockets from weighbridgeseach day at the destination point. As already noted, over the 10-monthassessment period of the 17,200 loads carried, 11,690 were overweight.(b) Secondly, Judge Sharp's reasons are not based on the fact that there wasno recorded data of the weights. Rather, the Judge's reasons were basedon the fact that the Act requires RUC operators to ensure that therelevant distance licence exceeds the gross weight at all times. TheJudge's decision did not turn on the lack of evidence (that is, data onthe weights carried) but on what the Act requires of operators.[59] In the end, Judge Sharp's reasoning turned on the fact that:[29] Two of the key purposes of the RUC Act are "[i] User pays and [ii] toimprove compliance and recovery of RUC". If operators can operate under alicence for one vehicle type and not pay the additional RUC payable for aheavier vehicle if they exceed the applicable weight limit, then the purpose ofuser pays is defeated. [60] Under the SSL methodology, an operator would only have to pay RUC at ahigher rate for an entire licence where every journey under that licence was at a higherweight. However, this ignores the fact that RUC rates are calculated using a costallocation model that takes into account the fact that heavy vehicles will not alwaysbe travelling with a full load and sometimes might have no load at all. The point ismade by Mr Talbot in his affidavit, sworn 10 May 2019:37 Appeal ground 2(iii).10 The [cost allocation model] calculates rates based on the assumptionthat a vehicle will only be loaded for 55% of the distance travelled.This is designed to ensure that heavy vehicles are not charged morethan their fair share, recognising that they will not always be travellingwith a full load and sometimes may have no load at all.16 As I have explained there is an allowance for trips travelledunderweight built into the RUC rates that are used by the TransportAgency to carry out unpaid RUC assessments.[61] In short, RUC rates are calculated using averages and are not intended in thefirst place to represent an exact measure of the precise costs caused by a particularvehicle. Accordingly, there is an inbuilt mechanism of proportionality in the RUCrates that are assessed through the cost allocation model. So, it cannot be said that theNZTA methodology does not take into account s 3(a) or that it is arbitrary.Availability of GPS data[62] I turn to the submission that the availability of GPS data makes for a moreaccurate assessment of the distance travelled overweight.[63] In my view, the availability of GPS data (such that the actual distance travelledoverweight can be calculated) does not make the NZTA methodology not"appropriate". While this factor may be said to be one that supports the alternativeSSL methodology (this is said without deciding or even assuming that this is the case),the test for the District Court Judge was not whether the NZTA methodology was theonly or even the most appropriate methodology, only whether it was itself anappropriate method.[64] Accordingly, there are no errors of law in terms of grounds 2(i), (ii), (iii) and 4of the Notice of Appeal.Other methods of ensuring compliance[65] Ground 3 of the Notice of Appeal is related to the above grounds of appeal.SSL submits that the purpose of compliance is ensured through statutory devices otherthan payment of additional RUC, including the penalties set out at ss 56–58 of the Act.An operator may also be prosecuted under s 9 of the Act and Police can issueinfringement notices (from $200–$400 for individuals and $800 for companies).38[66] Mr Neutze also refers to [38] of the Judge's decision where the Judge said:[38] It was also suggested that fines paid for overweight vehicles shouldbe taken into account in arriving at an appropriate assessment, but I do notaccept that. Fines cannot form part of an appropriate assessment of RUC.[67] Mr Neutze submitted the Judge misconstrued his submission. It was not thatfines should be taken into account in arriving at an appropriate assessment, but ratherthat there are other methods of ensuring compliance. However, even accepting thatthe Judge misunderstood the submission, it is no answer to say that the penaltyprovisions provide a sufficient incentive for operators to comply. As noted byJudge Sharp in Freight Lines:[54] Parliament cannot have intended that such underpayments couldnot be recovered from those who transgress in this way because there is apenalty regime in place, particularly when one considers that evidence revealsthat the fines imposed upon the Appellants here were not as great as the RUCwhich they should have purchased at the beginning. [I]f that was theintention, then Parliament would have expressly stated it to be so. This is auser pays Act. Greater compliance was required when it was passed and theonly way to achieve greater compliance is to ensure that transport serviceoperators are both penalised and required to pay for excess weight when theyfail to buy the necessary RUC at the beginning. [68] I agree with Judge Sharp. Therefore, in this case, while Judge Harrison mayhave misunderstood SSL's submission, there was no error of law in terms of ground 3.Difficulty of precise weighing in the forest[69] Next, I turn to appeal grounds 2(iv) and (v). First, under appeal ground 2(iv),Mr Neutze submits that the NZTA methodology does not take into account thepractical difficulties faced by logging truck operators in identifying precisely theweight of the loads in forests as opposed to when they are weighed at the point of thedestination. Secondly, under appeal ground (v), Mr Neutze further submits that thereis no evidence that any operators in the logging transport industry are in fact compliant.38 Road User Charges (Infringement Offences) Regulations 2012, reg 4 and sch 1. See also LandTransport (Offences and Penalties) Regulations 1999.[70] As to the first point regarding the difficulty of precise weighing in the forest,under the Act, "the onus falls squarely on the operator not to overload".39[71] Furthermore, there is the weight tolerance that may be applied by the NZTAwhen conducting its assessments. That tolerance ensures that operators are notunfairly penalised for one-off or isolated occasions where they are inadvertentlyoverloaded by a small amount. In his affidavit, Brian Crisp, the RUC specialist advisorwho carried out the RUC Assessment, describes the tolerance as follows:In the spreadsheet, every load that was above the maximum weight that it wasallowed to operate at has been coloured either yellow or red. Those that arecoloured yellow were above the maximum allowable weight but within thetolerance that the Agency applies under the Operating Guidelines. Thetolerances that [the NZTA] apply when carrying out assessments are the sameas those provided under the VDAM Rule:(a) For loads up to and including 31 January 2017, the tolerance appliedis 1.5 tonnes above the maximum allowable 44 tonnes. (b) For loads from 1 February 2017, the tolerance applied is 500 kg abovethe maximum allowable 46 tonnes. In accordance with the procedure set out in the Operating Guidelines, we onlyassessed SSL for unpaid RUC in relation to distance licences where thevehicle had operated at a weight above the tolerance [72] The NZTA is not required, under the Act, to apply this tolerance; the NZTAapplies the tolerance at its discretion, under its Operating Guidelines. That, in myview, adequately addresses the difficulty of logging operators in identifying the preciseweight of loads in the forest. Ultimately, it is for the operator to ensure compliancewith the weight limits.[73] As to the second point (appeal ground (v)), I have already determined that non-compliance of other operators in the logging industry is irrelevant at [45] above. Thealleged non-compliance of other operators does not excuse or justify SSL's own non-compliance. Nor does it make comparisons to what the notional compliant operatorwould do in the same circumstances inappropriate.39 TD Haulage Ltd v Director of Land Transport Safety HC Hamilton CIV-2006-419-1312,8 December 2008 at [57]. That case was decided under the old Road User Charges Act 1977;however, the observations are still relevant under the current Act.[74] Again, there was no error of law on the part of the Judge in terms of appealgrounds 2(iv) and (v).The notional compliant operator and 1,000 km licences[75] Turning to appeal ground 2(vi), SSL says that (even if the Judge was correct tocompare NZTA's assessment to a notional compliant operator, which SSL does notaccept) a notional compliant operator could have purchased licences for 1,000 km,which is the minimum distance licence an operator can purchase. SSL says thatadditional RUC should be assessed against a notional 1,000 km licence rather than thewhole distance of the licence which happened to be purchased by the operator, in thiscase 2,000 km. That was the approach adopted by Judge Wolff in the District Courtin Director of Land Transport Safety v TD Haulage Ltd, a case decided under the 1977Act.40 Mr Neutze submits that the Judge erred in not considering this approach.[76] Mr McCoubrey observes, and I accept, that while there is no specific mentionof TD Haulage in either Freight Lines or by the Judge in this case, in Freight Lines,which Judge Harrison followed, the point at issue under this ground was one of thevery arguments considered.41[77] Secondly, although Judge Wolff's decision on this issue was not considered bythe High Court in the appeal in that case, I do not consider the judgment of Stevens Jprovides support for SSL's argument. Stevens J held:42[56] Having carefully considered the statutory scheme of the RUC Act, Iam satisfied in answering the first question that the observations of HardieBoys J do have wider application than just in the context of a prosecution. Ihave no doubt that the observations reflect a proper interpretation of thelegislation concerning the imposition of road user charges for the use of roadsby heavy vehicles. The RUC Act requires transport operators to ensure thaton every journey the vehicle carries its own licence which at all times meetsthe twin requirements of a distance which exceeds that disclosed by thedistance recorder and which specifies a weight not less than the gross weightof the vehicle. Accordingly, as Hardie Boys J added later in the judgment, atransport operator "may thus not just trust to luck": at 356. Transport operatorshave a duty to ensure compliance.40 Director of Land Transport Safety v TD Haulage Ltd [2007] DCR 65 at [58].41 Freight Lines Ltd v New Zealand Transport Agency, above n 5, at [4].42 TD Haulage Ltd v The Director of Land Transport Safety (HC), above n 39.[57] For the purpose of both determination and payment of road usercharges and the avoidance of risk of prosecution, a proper interpretation ofs 5, read in its statutory context, requires transport operators to ensure that therelevant distance licence exceeds the gross weight at all times. Hence, theonus falls squarely on the operator not to overload.[78] I accept Mr McCoubrey's submission that a common feature under both the1977 Act and the 2012 Act is that a vehicle operator is required to ensure that it hasthe appropriate distance licence at all times. The operator decides what length distancelicence it purchases. Whatever the period, the operator needs to ensure it does notexceed the maximum weight provided for under that licence. I do not consider thereis anything arbitrary about the unpaid RUC being assessed over the length of thelicence that the operator actually purchased. This is consistent with the approach ofthe NZTA, which I have accepted is appropriate, namely that the benchmark for theassessment is what a compliant operator would have to pay.[79] There was no error of law in terms of ground 2(vi).Unavailability of type-H permits for SSL routes[80] Turning next to appeal ground 2(vii), SSL says Judge Harrison was wrong inlaw in that there was no evidence before the District Court that SSL was in fact ableto obtain the type-H permits for routes that it travelled, which the NZTA says SSLshould have purchased in order to comply with its obligations under the Act.[81] I have already considered this ground above at [39]–[42]. In short, I do notconsider that this is an assumption underlying the NZTA methodology; it is simplyhow the RUC regime works — the obligation is the same for all operators of RUCvehicles regardless of what route they take. And, to the extent that type-H distancelicences are not available on the particular routes on which SSL travels, that is becausecertain bridges on those routes are not rated to withstand the damage caused by suchvehicles. To that extent, SSL should have ensured that it was not travellingoverweight.Deductions for distances travelled off-road[82] Finally, I turn to appeal ground 2(viii), namely that the NZTA methodology isnot appropriate as it involves a misconstruction of the Act and maximises a return forthe NZTA, more than was justified by SSL's actual road use when overweight. Thisis inconsistent with the objectives of the Act. Related to this point, SSL says, in appealground 5, that the NZTA methodology does not make the necessary deductions fordistance travelled off the NZTA's roading network and is therefore not appropriate.[83] Off-road travel, that is, travel on private roads such as in forests, does notgenerate any cost to the NZTA and therefore should be excluded from RUCassessments. Mr Neutze submits that Judge Harrison was wrong in law in:(a) expressly referring to the fact that there were distances travelled off theNZTA roading network but failing to make any finding that a deductionwas required, despite the fact that the RUC Assessment included off-road travel; and(b) failing to ensure that the RUC assessment methodology automaticallymakes appropriate deductions for off-road travel, finding instead thatSSL, like any other operator, can make refund claims under s 30 of theAct,43 whilst ignoring the fact that refunds can only be claimed byoperators for the previous two years whereas assessments for unpaidRUC can date back to up to six years.[84] Mr Neutze submits that it is no answer for the NZTA to say, as it does, that itencouraged SSL to make refund claims under s 30 for private road travel prior to theRUC assessment being made.[85] Instead, Mr Neutze submits that the approach under the SSL methodology isto be preferred. Under that methodology, SSL would only be charged for the precise43 Stan Semenoff Logging Ltd v New Zealand Transport Agency (DC), above n 3, at [37]. This isinferred from the Judge's comments that "the agency has already requested details so thatappropriate credits can be passed".distance it says it travelled overloaded on the NZTA roading network. Thatinformation, SSL says, is available via its GPS data, which the NZTA can verify.[86] In reply, Mr McCoubrey submits that s 30 is clear that it is for the operator toapply for a refund of RUC for off-road travel. The operator is the only person whoknows what off-road travel a vehicle has done. Moreover, he says that throughout theRUC Assessment, the NZTA was clear with SSL that it was SSL's responsibility toensure its off-road claims were up to date so that the assessment was only calculatedon the basis of the "effective distance" of each distance licence being assessed. SSLis said to have been reminded three times before the assessment was issued. In fact,SSL did submit a number of off-road claims during the RUC Assessment process.Mr Crisp, in his affidavit, confirms that where this was done the NZTA ensured thatnone of the off-road travel claimed was included in the RUC Assessment.[87] I acknowledge Mr Neutze's submission that the off-road travel refund can onlybe claimed for the previous two years compared to assessments for unpaid RUC whichcan date back to up to six years. However, that alone is insufficient to show an errorof law. That is simply how Parliament has determined that the Act should operate. Itwas up to SSL to make claims for off-road travel. Where it did so the NZTA tookthose claims into account in making its assessment. The responsibility to make theclaim falls on the operator. Where it does not make claims, as occurred in this case, itdoes not follow that the Judge erred in law in deciding that the assessmentmethodology was appropriate.[88] There was no error in terms of appeal grounds 2(viii) and 5.SSL's alternative methodology[89] It is not correct to say, as SSL does, that the Judge disregarded its alternativemethodology and thereby made an error of law. The Judge did refer to SSL'smethodology saying:[35] It seems to be to be illogical and inappropriate for SSL to submit thatit is appropriate for it to acquire licences for lesser weights than are carried onindividual trips and then to maintain that all that is required to meet theirobligations under the statute is to pay the difference between the weightpermitted by the licence obtained and the actual weight. 11,690 instances ofoperating at an excessive weight is a clear indication of the inappropriatenessof the method of calculation advanced on behalf of SSL.[90] I acknowledge Mr McCoubrey's submission that SSL's methodology is"inappropriate, unworkable and contrary to the scheme of the RUC Act". Hissubmissions can generally be summarised as follows:(a) First, the SSL methodology would unfairly disadvantage compliantoperators who have purchased the appropriate licence and will havepaid RUC at the higher rate over the whole of their distance licence.This is because compliant operators must purchase a distance licencethat provides for a maximum weight that covers the heaviest load underthat licence; they do not have the luxury of purchasing a less expensivelicence and then, at the end of the licence, paying a small(er) amount ofadditional RUC for those particular journeys where it was overweight.(b) Secondly, from a practical perspective, the SSL methodology would besignificantly more onerous and difficult for the NZTA. As Mr Aldridgestated in his original affidavit, the SSL methodology "would require theTransport Agency to rely on what the operator tells us, essentiallyturning it into something akin to an honesty box system". The NZTAwould have to undergo an extensive process of verifying thatinformation for each journey, which would be an onerous task, contraryto the purpose of the Act, which includes to "simplify the road usercharges system" and improve "the recovery of, road user charges".[91] However, it is not for this Court on an appeal on questions to law, to considerwhether the SSL assessment methodology is appropriate (save to the extent that partsof the methodology have already been commented on under the various alleged errorsof law).[92] Having found that the District Court Judge made no errors of law in hisdecision that the NZTA methodology was appropriate, it is not for this Court to gofurther and examine the SSL methodology.Questions of law[93] The questions of law and answers are as follows:(a) Did the District Court err in law by misinterpreting, misapplying ormisconstruing the RUC Act?Answer: No.(b) Did the District Court err in law by failing to take into account relevantconsiderations?Answer: No.(c) Did the District Court err in law by taking into account irrelevantconsiderations?Answer: No.(d) Did the District Court err in law by failing to make necessary factualfindings or making findings for which there was no or inadequateevidence?Answer: No.(e) Did the District Court err in law by reaching conclusions that noreasonable Court could have reached?Answer: No.Result[94] For the above reasons, the appeal is dismissed.Costs[95] Costs are reserved. If the parties are able to agree costs a joint memorandumshould be filed within 20 working days of the date of this judgment. In the eventagreement cannot be reached, NZTA is to file and serve its submissions within fiveworking days of the date for the joint memorandum and SSL is to file and serve itsmemorandum within a further five working days. Memoranda should not exceed fivepages (excluding any attachments).___________________________________Gordon J