Tug of Law

But beyond Wellington, the view is quite different. Those defending corporate interests claim scrapping appeals to the judicial committee of the Privy Council is big mistake.
What scares them the most is Government’s seeming willingness to trade-off largesse in the form of greater self governance with the broader interests of business… which for the most part, are the only real users of the Privy Council anyway.
So how will business be affected if the Privy Council is scrapped as our last Court of Appeal?
The way Bernard Robertson, editor of the New Zealand Law Journal, sees it, retaining the Privy Council is part of good economic policy.
He argues that dispensing with the Privy Council for short-term political gain is at best short-sighted. More importantly, he believes it would add further lead to the saddle-bags of our international traders.
Giving the “two fingers” to international conventions by scrapping appeals to the Privy Council is not only dangerous, says Robertson, it runs counter to global migration towards harmonising conventions.
For example, even the EU Court of Justice takes precedence over the House of Lords.
Assuming Attorney General Margaret Wilson (a former professor of law) succeeds in snuffing-out appeals to the Privy Council, Robertson believes the downstream consequences for business could be disastrous. “It’s businesses that use the Privy Council the most.
“Ironically, those who have nothing to do with business want to take this right away from them.” So why has Robertson come to these conclusions?
For starters, he says scrapping the right of appeal to an internationally-recognised final court (like the Privy Council) would only fuel greater uncertainty about legal outcomes. Of the nine Kiwi cases heard by the Privy Council in 2000, five were dismissed, two were fully allowed, one partially allowed and one was returned to the New Zealand Court of Appeal. These relatively good odds, says Robertson, clearly imply that our Court of Appeal gets it wrong quite often. tax decision (late January) involving the former Auckland Harbour Board (AHB) proves the point.
The Privy Council “found” for the AHB, overturning High Court judgment that originally cost them $1.9 million in tax. Secondly, he suspects the cost of doing business globally is likely to go up if the appeals to the Privy Council are abolished. “I don’t believe New Zealand businesses are taking moves to scrap the Privy Council seriously enough. They possibly don’t realise it, but it would re-rate the cost of international trade within short order.”
Assuming recent Treasury reports are valid, Robertson’s probably talking sense.
Treasury puts the sovereign risk for foreigners trading/investing in New Zealand at two percent. Crudely put, the two percent margin between interest rates in New Zealand and other offshore markets like the US, compensates for the added-risk of investing locally. Robertson argues that overseas businesses wanting to trade/invest here have neither the time nor the inclination to understand New Zealand law. Remove the comfort-factor, inherent in their access to an international court, (a la the Privy Council) and Robertson says the sovereign risk, together with insurance costs (more especially professional indemnity cover) are likely to go up.
Despite having both High Court and subsequent Court of Appeal case overruled by the Privy Council some years back, Ports of Auckland boss Geoff Vazey still believes New Zealand should stick with the English Law Lords. What the Privy Council gives to the total New Zealand legal system, says Vazey, is credibility and integrity. It’s no secret, New Zealand desperately needs to become more attractive to international investors. But Vazey says scrapping appeals to the Privy Council would make investing locally increasingly less desirable.
“When it comes to investing locally, one key question dominates… what is New Zealand’s legal system? It’s broadly recognised that New Zealand law does provide access to the Privy Council. As result, I’ve never seen contract rejected simply because it’s administered under local law,” says Vazey.
Nevertheless, he says if the Government gets its way, the possibility of offshore traders snubbing contracts administered under local law, is risk in waiting. “Especially if high-profile case goes off the rails, without the Privy Council in place for it to be arbitrated.”

This is one risk Deloitte Touche Tohmatsu, plus the other big five accounting firms, are not prepared to take. “Like our counterparts, we have professional indemnity in the offshore markets. So we naturally want international law to prevail if we’re ever sued. But let’s not be coy, we’re by no means the exception to the rule. As trade-oriented country, at least 25 percent of our economy is insured in the international arena,” says Deloitte’s chairman John Hagen. He argues that if we lose access to this international court, we’ll also become victim to the biased conclusions of less capable alternative court.
Why so? Unlike Australia, neither Robertson nor Hagen believes New Zealand has the necessary legal talent-pool to establish final court of appeal (of Privy Council quality). Based on Robertson’s estimates (using the UK as proxy), New Zealand could only manage to produce two of the six or seven high calibre judges needed to successfully operate its own last court of appeal. “It’s generally accepted that two-tier system will ultimately replace appeals to the Privy Council. But New Zealand is too small to have independent judges. The people who preside over these courts would know each other, and this would foster personal biases,” says Hagen.
In other words, the tighter the legal community becomes, the greater the fears that the appeal process will become less independent. Those who advocate abolishing appeals to the Privy Council argue that our own final Court of Appeal will be liberated to shape the development of the law.

Moot point
Robertson poo poos this as moot point. The law he says isn’t there to be shaped, it’s there to be interpreted against principle and precedent. good example of what final court of appeal should do, says Robertson is the 1995 Global Funds Management Asia Ltd V (NZ) Securities Commission case. Now regarded as locus classicus by the legal fraternity, it saw the Privy Council re-explain the law on corporate personality.
By comparison, he cites an employment law case, Brighouse V Bilderbeck (1994/95) as an example of what the courts can get up to when free from precedent. Cases that go from our Employment Court to the Court of Appeal do not have the access to Privy Council. In this case, the Court of Appeal deemed that everybody within said firm had to have redundancy clause written into their contract. If they didn’t include one by pre-determined date… the Court (in this instance) threatened to write one for them. The Court of Appeal backed-down on this precedent in subsequent case. But Robertson says it shows that where there’s no access to the Privy Council, courts are likely to end up pushing their own barrow.

So how costly is it?
Travel and accommodation aside, it costs around NZ$100,000 to have case heard by the Privy Council ($20,000 to take similar case to our Court of Appeal). Taking into account the likelihood that you might indeed lose, firm is effectively punting on quarter of million dollars in shareholder funds.
But if the success Kiwi companies have at the Privy Council is any gauge, this might be punt more companies may willingly take. Especially if the costs were significantly reduced. Grey believes cheaper local alternative to the Privy Council would see lot more than the 10 (local) cases get access to last court of appeal annually. But despite political unity over abolishing appeals to the Privy Council, there’s no conse

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