Judgment: Splice Fruit v Kiwifruit Board

IN THE HIGH COURT OF NEW ZEALAND
TAURANGA REGISTRY

UNDER
the Judicature Amendment Act 1972

IN THE MATTER
of three decisions of Kiwifruit New Zealand declining applications for collaborative marketing arrangements under the Kiwifruit Export Regulations 1999

BETWEEN

SPLICE FRUIT LTD
First Plaintiff
SEEKA FRUIT INDUSTRIES LTD
Second Plaintiffs

AND

THE NEW ZEALAND KIWIFRUIT BOARD
First Defendant
ZESPRI GROUP LTD
Second Defendant

[…]

Judgment:

3 May 2016

JUDGMENT OF HEATH J

The kiwifruit industry

[1] In 1999, the Government of the day decided to restructure the kiwifruit industry. It proposed a new regulatory framework for the export of kiwifruit from New Zealand. One of the aims was to separate out the functions undertaken by the old New Zealand Kiwifruit Marketing Board (the old Board), so that:

(a) Its commercial business was assumed by a limited liability company to be established for that purpose, Zespri Group Ltd (Zespri). Zespri was to be subject to generic laws governing the governance and management of all companies. Its shares were to be issued to producers, and tradable among them.

(b) Regulatory functions were to be transferred to a newly established New Zealand Kiwifruit Board (the Board). Those functions were designed to monitor and enforce various provisions designed to minimise the risk that Zespri would abuse its privileged position in the market, and to safeguard the overall economic interests of all kiwifruit suppliers.

[2] These policy changes were given effect by the Kiwifruit Industry Restructuring Act 1999 (the Act), and the Kiwifruit Export Regulations 1999. As a result of a deliberate policy decision, and consistent with the views of a majority of industry participants, a monopsony was created in favour of Zespri, so that it is the sole entity that is entitled to export kiwifruit to anywhere other than Australia. A number of mechanisms were put in place to minimise the possibility of abuse of Zespri’s market power,4 and to ensure that increasing the overall wealth of kiwifruit suppliers remained the primary objective.

[3] This proceeding involves the concept of “collaborative marketing”. While not specifically defined in the Act or the Regulations, this regime enables third parties to seek approval from the Board to undertake a co-operative export venture, in association with Zespri. The Board, as the independent regulator, is empowered to approve collaborative marketing proposals. The decision to use this policy tool to encourage growth of the overall wealth of kiwifruit suppliers was deliberate; an export licensing regime was expressly rejected.

The applications

[4] Splice Fruit Ltd (Splice) and Seeka Kiwifruit Industries Ltd (Seeka) apply for judicial review of three discrete decisions made by the Board on applications for collaborative marketing approvals; one by Splice and two by Seeka. All three decisions were made on 22 December 2015, for reasons given in writing on 21 January 2016. All three proposals were rejected.

[…]

Result

[122] Each application for judicial review is granted:

(a) All three applications are remitted for reconsideration by a committee established for that purpose by the Board, in accordance with the interpretation of the Regulations set out in this judgment.

(b) I make a declaration that the “appeal” process to which cl (E) of the Information Document refers is lawful, and provides a power for the Board to review any decision reached by a collaborative marketing committee.

[123] Costs are reserved. The Registrar shall allocate a telephone conference before me at 9am on the first available date after 13 June 2016. Memoranda shall be filed no less than three working days before the conference setting out the parties’ positions on costs. If not agreed, I shall make directions as to the exchange of submissions and whether any hearing will be oral or on the papers.

[124] I do not believe that any information contained in this judgment is of a confidential nature which should not be published. The judgment will be released publicly no earlier than 9am on Friday 6 May 2016. If counsel have any concerns about the form in which the judgment is to be published they shall file memoranda before that time for my consideration. If that were to occur the judgment would not be published until such time as I determine the issues raised.

[125] I thank counsel for their assistance.

Full judgment: SpliceFruitvKiwifruit.pdf

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