Should there be a dedicated commercial court?

The proposed Supreme Court to replace the Privy Council revives arguments about how fairly and competently the needs of business will be handled.

The government is to announce today [Monday 15 April] the structure it will apply if it abolishes appeals to the Privy Council in London, as expected — a bill is expected in the House this year for passing next year. At the moment the highest domestic court is the Court of Appeal, from which litigants may appeal to the Privy Council.

Business interests, notably the Business Roundtable, have condemned the abolition as removing access to some of the best legal brains in the Commonwealth. For much of the 1990s business chafed at Court of Appeal decisions which it felt showed insufficient awareness of commercial practice and too great a willingness to make law, which caused uncertainty.

With the departure for the House of Lords of the legally adventurous Sir Robin Cooke, who was the court’s President at that time, the uncertainty diminished. Sir Ivor Richardson, who replaced Sir Robin and has himself just retired, had specialised in tax law and understood economic principles and business practice.

A growing number of former opponents to abolition of Privy Council appeals have since switched sides. Among them was Jack Hodder, the longtime editor of the influential legal weekly, Capital Letter, and a member of the 14-person advisory group on the new structure.

But the Roundtable gripe that judicial talent is more thinly spread in New Zealand than the much more populous Britain remains. In addition, there are fears that in the small, five-member court that is proposed there might not be judges with a background in commercial law.

Drawing on authoritative accounts, ACT MP Stephen Franks, who also opposes abolition, says the new court will have a place reserved from someone who has a deep knowledge of Maoritanga — but not for someone steeped in business law and practice.

This issue provoked a lively exchange on 6 April between the Chief Justice, Dame Sian Elias, and Alan Galbraith QC at a law conference in Wellington to mark Sir Ivor’s retirement.

Mr Galbraith applauded the designation in Auckland of a “commercial list” of judges with commercial law experience, which had had “a positive impact in speeding the disposition of commercial cases.

“However,” he added, “while the commercial list judges determine the procedural and interlocutory decisions during the progress of the case for trial, the cases fall back into the general list for allocation of a judge for the substantive hearing.

“All commercial counsel of my acquaintance regard that as a fundamental weakness of the commercial list.”

Instead, Mr Galbraith proposed commercial list judges should determine which cases were commercially significant enough to be tried before a commercial list judge.

This, he thought, would “improve the performance of the courts’ role in facilitating and regulating commerce”. He cited a rent case he considered wrongly decided by the Court of Appeal because it rejected advice of marketplace practice and also a British case to underline the importance of an understanding of business commonsense in deciding commercial cases.

But Dame Sian took issue with him. Business was not conducted in a vacuum, she said, but in a context and other areas of the law were relevant in deciding commercial cases — for example, human rights law. Commercial lawyers, she said, were not always familiar with those other branches of the law.

And Attorney-General Margaret Wilson, in an interview yesterday [Sunday 14 April] underlined that business operates in a cultural context, as, she said, had been recognised by Fonterra last week in setting out its worldwide employment principles.

It would be “insane”, Ms Wilson said, not to have on the court someone who is skilled in commercial law and practice and authorities should “always make sure that the court had the skill and merit required to address all matters that came to it”.

But “during the 1990s it became clear that the whole world does not revolve around business”. This was evident, for example, in management and resource theory. Ms Wilson also noted that the “vast majority” of commercial cases that came before the courts dealt with tax, which was a public interest matter, not an issue of exchanges between businesses.

She added that it was important that the process of appointing judges to the new court (and all other courts) was transparent and open. A bill has been before Parliament since 1999 proposing an appointments commission, independent of the government. This, she said, would likely be rewritten to accompany the legislation setting up the new court.

At the moment the Attorney-General appoints judges, after wide consultation. This would continue formally to be the case, except that the consultation would be by the independent commission.