Rowling v Takaro Properties Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 1986 |
| Year | 1986 |
| Court | Privy Council |
Negligence - Duty of care to whom? - Government minister - Ministerial consent required for issue of shares by New Zealand company to overseas company - Minister's decision refusing consent quashed in judicial review proceedings - Whether minister owing duty of care to company - Whether minister negligent -
R., a United States citizen, formed the plaintiff company in New Zealand to establish a high class tourist resort there. Land was purchased in a remote area, and a lodge was built which opened in 1971. It did not operate profitably and closed in 1973. Additional capital was sought, and an agreement was negotiated whereby, inter alia, a Japanese company would increase the plaintiff's capital by $200000. In 1974 the plaintiff applied to the Reserve Bank of New Zealand under regulation 3(1)(b) of the Capital Issues (Overseas) Regulations 1965F1, made pursuant to section 28(1) of the Reserve Bank of New Zealand Act 1964F2, for consent to the issue to the Japanese company of 80000 ordinary and 120000 preference shares of $1 each, which would be 24.2 per cent. of the plaintiff's voting share capital. The application was referred to the Minister of Finance, and he consulted the cabinet economic committee, who with departmental officers being present decided that the application should be refused. In March 1974 the plaintiff was informed that the minister had refused consent to the application. On application by the plaintiff to the Supreme Court of New Zealand (Administrative Division) for judicial review Wild C.J. quashed the minister's decision and directed him to reconsider the application for consent holding that the minister had erred in taking into consideration as the dominant factor his desire that the land should revert to New Zealand ownership (“the reversion factor”). The Court of Appeal of New Zealand affirmed that judgment. In March 1975 the plaintiff went into receivership, and in April 1975 as a result of the delay and changed economic circumstances the Japanese company withdrew from the transaction. The plaintiff did not require the minister to reconsider the application and he did not do so. The plaintiff and R. brought an action in the High Court of New Zealand against the minister and the Attorney-General claiming, inter alia, damages for the minister's negligence in refusing consent. At the hearing before Quilliam J., the minister testified that he knew that he was not entitled to take into account the reversion factor if it stood alone, but that he thought he could together with eight other matters which led him to conclude that the proposed share issue was not in the interest of New Zealand and thus to refuse consent. The judge, in dismissing the action, held that the minister was under a prima facie duty of care but no breach had been established since the minister was not negligent in taking into account the reversion factor or in failing to obtain legal advice as to whether he was entitled to take that factor into consideration. The Court of Appeal allowed the plaintiff's appeal holding that the minister was liable in negligence, and awarded $300000 damages. In the exercise of their discretion under section 87(1) of the Judicature Act 1908F3 as amended, the Court of Appeal awarded interest on the damages from the date of the minister's refusal of consent in March 1974 to the date of judgment in May 1986 at 11 per cent. per annum, which was the maximum rate of interest prescribed by article 2(1) of the Judicature (Interest on Debts and Damages) Order 1980,F4 which came into force on 1 April 1980.
On the defendants' appeal to the Judicial Committee:—
Held, allowing the appeal, (1) that in all the circumstances it was unnecessary to decide whether the minister owed a duty of care to the plaintiff because no breach of duty had been established since, even if the minister had made an error in law, he was not negligent in believing that, in deciding under regulation 3(1)(b) of the Regulations of 1965 whether to consent to an issue of shares to a company outside New Zealand, he was entitled by section 28(1) of the Act of 1964 to take into consideration in order to safeguard the credit, overseas resources and development of New Zealand, matters affecting all aspects of development, including the reversion factor and the eight other matters upon which he relied in refusing consent to the plaintiff's application; that, since the judge had found that the minister had not considered only the reversion factor in deciding to refuse consent to the plaintiff's application and he had rejected the submission that, in the circumstances, the minister should have felt himself to be under an obligation to take legal advice on the effect of the statutory requirements, the plaintiff's two basic grounds for alleging negligence had failed and the decision of the judge should be restored (post, pp. 434A–D, 435A–D, 438D–E, F–438H, 439H).
Observations on whether the minister owed a duty of care in the circumstances and, if such a duty existed, its possible scope (post, pp. 428H–432B).
(2) That the court's power to award interest on damages under section 87 of the Judicature Act 1908, as amended, was limited to the maximum rate of interest prescribed from time to time during the period between the date when the cause of action arose and the date of judgment and so the maximum rate of 11 per cent. per annum prescribed by article 2(1) of the
The following cases are referred to in the judgment of their Lordships:
Anns v. Merton London Borough Council [
Dunlop v. Woollahra Municipal Council [
Peabody Donation Fund (Governors of) v. Sir Lindsay Parkinson & Co. Ltd. [
Rowling v. Takaro Properties Ltd. [
Takaro Properties Ltd. v. Rowling [
Yuen Kun Yeu v. Attorney-General of Hong Kong [
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Abbott v. Sullivan [
Australian Mutual Provident Society v. Commissioner of Inland Revenue [
Bevan Investments Ltd. v. Blackhall and Struthers (No. 2) [
Bourgoin S.A. v. Ministry of Agriculture, Fisheries and Food [
Central Canada Potash Co. Ltd. v. Attorney-General for Saskatchewan [
Chaplin v. Hicks [
Craig v. East Coast Bays City Council [
Curran v. Northern Ireland Co-ownership Housing Association Ltd. [
Davies v. Taylor [
Hotson v. East Berkshire Area Health Authority [
Investors in Industry Commercial Properties Ltd. v. South Bedfordshire District Council [
Junior Books Ltd. v. Veitchi Co. Ltd. [
Kamloops (City of) v. Nielson (
Leigh and Sillavan Ltd. v. Aliakmon Shipping Co. Ltd. [
Meates v. Attorney-General [
Ministry of Housing and Local Government v. Sharp [
Mount Albert Borough Council v. Johnson [
Nance v. British Columbia Electric Railway Co. Ltd. [
Prozak v. Bell Telephone Co. of Canada (
Reid v. Reid [
Richardson v. London County Council [
San Sebastian Pty. Ltd. v. Minister Administering the Environmental Planning and Assessment Act 1979 (
Schilling v. Kidd Garrett Ltd. [
Simonius Vischer & Co. v. Holt & Thompson [
Stieller v. Porirua City Council [
Sutherland Shire Council v. Heyman (
Sykes v. Midland Bank Executor and Trustee Co. Ltd. [
Tai Hing Cotton Mill Ltd. v. Liu Chong Hing Bank Ltd. [
Taranaki Catchment Commission and Regional Water Board v. R. & D. Roach Ltd. [
Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg (
Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [
APPEAL (No. 61 of 1986) with leave of the Court of Appeal of New Zealand, by the first defendant, Wallace Edward...
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