Supreme Court ruling may limit regulator's ability to chase offenders overseas

Friday 16th April 2010

A Supreme Court ruling to let an Australian businessman appeal his involvement in a cartel case may limit the Commerce Commission’s ability to chase executives overseas.

The court ruled in favour of Andrew Poynter and dismissed him from the proceeding which saw three Nufarm companies, including Poynter’s Fernz Timber Protection brand, fined a total of $1.9 million for colluding on price and market share with rival Koppers Arch Investments Pty in February 2008. The commission will have to pay $15,000 costs to Poynter for the Supreme Court hearing, as well as costs from the previous Court of Appeal and High Court hearings.

The case related to the operation of a cartel in New Zealand’s timber treatment industry between 1998 and 2002, at an estimated cost of $35 million. Neil Harris, one of the executives from the Osmose group of companies who also lived outside New Zealand, didn’t appeal the original High Court decision in 2007, while the commission dropped its proceedings against a third executive, Osmose’s Elias Akle, last year.

The court ruled that Poynter wasn’t covered by New Zealand’s Commerce Act, falling outside its jurisdiction by virtue of not making any directions to the local business. Further, because he was acting as an agent for the company, the court ruled the company’s New Zealand employees who reported to him weren’t acting on his behalf.

The ruling knocked back the issue to the legislators, saying it was up to Parliament if it wanted the act to reach across national boundaries, and that it wasn’t up to the courts to do so.

“We do not, however, consider it is appropriate in the present context for the courts to impose piecemeal common law glosses onto a statutory code,” the ruling said. “It is far better, both in principle and pragmatically, for Parliament to address the issues arising in a comprehensive way rather than for the courts to effect ad hoc additions by a process which does not accord with appropriate principles of statutory interpretation.”

Commerce Commission chairman Mark Berry said the ruling overturned the previous judgements against the individuals, and the regulator is still considering its full implications. A spokeswoman confirmed the ruling wouldn’t impact on the successful prosecutions of the companies.

The Supreme Court accepted that “extending the reach of a New Zealand statute into other countries may not universally be beneficial” and that “only Parliament, with the assistance of the Executive, can satisfactorily undertake the necessary exercise.”

Businesswire.co.nz

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