Mercury Energy Ltd v Electricity Corporation of New Zealand Ltd

JurisdictionUK Non-devolved
Judgment Date1994
CourtPrivy Council
[PRIVY COUNCIL] MERCURY ENERGY LTD. Appellant and ELECTRICITY CORPORATION OF NEW ZEALAND LTD Respondent [APPEAL FROM THE COURT OF APPEAL OF NEW ZEALAND] 1994 Jan. 31; Feb. 1, 3, 7; 28 Lord Templeman, Lord Goff of Chieveley, Lord Mustill, Lord Slynn of Hadley and Lord Woolf

New Zealand - Judicial review - State enterprise - Termination by state enterprise of contractual arrangements for supply of electricity - Whether state enterprise amenable to judicial review - Whether decision reviewable - Whether state enterprise under statutory duty to continue arrangements - Judicature Amendment Act 1972 (No. 130 of 1972), s. 4(1) - State-Owned Enterprises Act 1986 (No. 124 of 1986), s. 4(1), Sch. 1

The defendant, designated a state enterprise under the State-Owned Enterprises Act 1986, was responsible for generating and distributing electricity throughout New Zealand to local electrical supply authorities. By a written agreement in 1987, and supplemental agreements, the defendant undertook to supply bulk electricity to the plaintiff supply authority on specified terms and at prices agreed until the end of March 1993. In March 1992 the defendant gave the plaintiff 12 months' notice of termination of the contractual arrangements, but nevertheless continued to supply the plaintiff, conceding that it was bound to do so at fair and reasonable prices. The plaintiff brought an action against the defendant claiming that it had no power to determine the contractual arrangements and pleading causes of action in contract, breach of statutory duty under section 4(1)(c)of the Act of 1986F1 and abuse of dominant position by a monopoly supplier of an essential commodity. In addition, pursuant to section 4(1) of the Judicature Amendment Act 1972,F2 the plaintiff applied for judicial review of the defendant's decision to terminate the contractual arrangements. On the defendant's application that the non-contractual causes of action be struck out the judge struck out those relating to statutory duty and monopoly position but not the application for judicial review. The Court of Appeal of New Zealand dismissed the plaintiff's appeal and allowing the defendant's cross-appeal struck out the application for judicial review.

On the plaintiff's appeal to the Judicial Committee: —

Held, (1) that since the defendant, as a state enterprise, was a public body established by statute carrying on business in the interests of the public, and since its decisions made in the public interest might adversely affect the rights and liabilities of private individuals without affording them any redress, such decisions were in principle amenable to judicial review under section 4(1) of the Judicature Amendment Act 1972 and under the common law (post, p. 526C–D).

But (2) dismissing the appeal, that since judicial review involved interference by the court with a decision made by a person or body empowered by law to reach that decision in the public interest a litigant could only invoke judicial review if he pleaded plausible allegations which, if proved at trial, would show that the decision had not been reached in accordance with law; that section 4(1) of the State-Owned Enterprises Act 1986 imposed on the defendant the duty to pursue the principal objective of operating as a successful business and the Act authorised the defendant to enter into and determine contracts in its discretion, and the general and vague allegations of impropriety in the pleadings, unsupported by any reference to any fact, were insufficient to ground a claim that the defendant had acted unreasonably or in bad faith or for improper or ulterior motives in deciding to terminate its contractual arrangements with the plaintiff, so that the plaintiff was not entitled to seek judicial review of that decision; that, furthermore, the Act of 1986 did not impose a statutory duty on the defendant to continue those arrangements, and the claim concerning abuse of position by a monopoly supplier, if actionable, was unsupported since lawful termination of a contract was not an abuse; and that, accordingly, all the causes of action other than those alleging breach of contract had properly been struck out (post, pp. 526D–E, 528B–C, F–H, 529A, E–F).

Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [1948] 1 K.B. 223, C.A. and dictum of Lord Brightman in Chief Constable of the North Wales Police v. Evans [1982] 1 W.L.R. 1155, 1173, H.L.(E.) applied.

Per curiam. It does not seem likely that a decision by a state enterprise to enter into or determine a commercial contract to supply goods or services will ever be the subject of judicial review in the absence of fraud, corruption or bad faith (post, p. 529A–B).

Quaere. Whether in default of agreement between the parties a fair and reasonable price for bulk electricity provided by the defendant to the plaintiff can ultimately be determined by the court (post, p. 525C–D).

Decision of the Court of Appeal of New Zealand affirmed.

The following cases are referred to in the judgment of their Lordships:

Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [1948] 1 K.B. 223; [1947] 2 All E.R. 680, C.A.

Chief Constable of the North Wales Police v. Evans [1982] 1 W.L.R. 1155; [1982] 3 All E.R. 141, H.L.(E.)

Reg. v. Independent Television Commission, Ex parte TSW Broadcasting Ltd., The Times, 30 March 1992, H.L.(E.)

The following additional cases were cited in argument:

Allnutt v. Inglis (1810) 12 East 527

Burt v. Governor-General [1992] 3 N.Z.L.R. 672

Clutha Leathers Ltd. (in rec.) v. Telecom Corporation of New Zealand Ltd. (1988) 4 N.Z.C.L.C. 64,249

Davy v. Spelthorne Borough Council [1984] A.C. 262; [1983] 3 W.L.R. 742; [1983] 3 All E.R. 278, H.L.(E.)

Erebus Royal Commission, In re; Air New Zealand Ltd. v. Mahon (No. 2) [1981] 1 N.Z.L.R. 618

Federated Farmers of New Zealand Inc. v. New Zealand Post Ltd. (unreported), 1 December 1992; CP No. 661/92, New Zealand

Foster v. British Gas Plc. [1991] 2 A.C. 306; [1991] 2 W.L.R. 1075; [1991] 2 All E.R. 705, H.L.(E.)

New Zealand Maori Council v. Attorney-General [1987] 1 N.Z.L.R. 641

New Zealand Maori Council v. Attorney-General of New Zealand [1994] 2 W.L.R. 254; [1994] 1 All E.R. 623, P.C.

New Zealand Optical Ltd. (in rec.) v. Telecom Corporation of New Zealand Ltd. (1990) 5 N.Z.C.L.C. 66,457

New Zealand Stock Exchange v. Listed Companies Association Inc. [1984] 1 N.Z.L.R. 699

Peters v. Collinge [1993] 2 N.Z.L.R. 554

Reg. v. Lord Chancellor, Ex parte Hibbit and Saunders, The Times, 12 March 1993

Reg. v. National Coal Board, Ex parte National Union of Mineworkers [1986] I.C.R. 791

Reg. v. Panel on Take-overs and Mergers, Ex parte Datafin Plc. [1987] Q.B. 815; [1987] 2 W.L.R. 699; [1987] 1 All E.R. 564, C.A.

Reg. v. Tower Hamlets London Borough Council, Ex parte Chetnik Developments Ltd. [1988] A.C. 858; [1988] 2 W.L.R. 654; [1988] 1 All E.R. 961, H.L.(E.)

Singh v. Refugee Status Appeals Authority (unreported), 22 October 1993; M 1224/93, New Zealand

South Pacific Manufacturing Co. Ltd. v. New Zealand Security Consultants & Investigations Ltd. [1992] 2 N.Z.L.R. 282

South Taranaki Electric-Power Board v. Patea Borough [1955] N.Z.L.R. 954

Southern Ocean Trawlers Ltd. v. Director-General of Agriculture and Fisheries [1993] 2 N.Z.L.R. 53

State Advances Superintendent v. Auckland City Corporation and the One Tree Hill Borough [1932] N.Z.L.R. 1709

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    • Australia
    • Melbourne University Law Review Vol. 41 No. 2, December 2017
    • 1 December 2017 consider the public interest can, however, affect reviewability: Mercury Energy Ltd v Electricity Corporation of New Zealand Ltd [1994] 1 WLR 521; MBA Land Holdings Pty Ltd v Gungahlin Development Authority (2000) 206 FLR (135) This can be understood in relation to other actors, some of ......

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